Yahoo Inc. was upgraded to buy from hold at BGC Monday, based on its new sum-of-the-parts value following the Alibaba IPO. Yahoo has a 16% stake in Alibaba, that is worth $35.1 billion since the Chinese e-commerce company's IPO in September. It has a further 35% stake in Yahoo Japan that is worth $7.4 billion, and about $9 billion in cash, based on BGC's estimates. That gives the company total assets of $51.5 billion, excluding tax liability and liquidity discounts, BGC analyst Colin Gillis wrote in a note. "Using our 1.4 billion estimate for 2015 EBITDA, and assigning a 5x multiple - a valuation that reflects the myriad of problems with the business, assigns a value to the core of $7 billion," he wrote. "We see the potential tax liability as the wild card variable that could represent up to $15 billion of liability." One way to monetize the asset base in a tax-efficient way would be for Alibaba to buy the company and then dispose of the Yahoo Japan stake via an asset swap with Softbank and private-equity partners, said Gillis. Yahoo shares were down 1.9% in early trade.
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