Yahoo shares rise on reports of sale

Shares of Yahoo traded more than 5% higher yesterday after reports that the company could sell its core internet business, which chief executive Marissa Mayer has failed to turn around after more than three years on the job.

Yahoo’s board will weigh a sale of the business, which e analysts said could be worth in the neighbourhood of $4bn (€3.77bn), at a board meeting which started late Wednesday, a source familiar with the matter told Reuters.

Analysts have put little value on the business, with almost all of Yahoo’s market capitalisation of about $34bn ascribed to its stakes in Chinese e-commerce company Alibaba Holding Group and Yahoo Japan.

Cowen & Co analysts estimated that Yahoo’s core search and display advertising business was worth $3.84bn, while Pivotal Research Group valued it at just $1.9bn.

“Realising value is far from assured, however,” Pivotal analyst Brian Wieser wrote in a note.

“The big question is whether anyone would actually show up with a meaningful bid.”

The Wall Street Journal first reported that Yahoo might sell its internet business.

It had also reported that the board meeting would discuss how to proceed with the spinoff company’s 15% stake in Alibaba, worth more than $20bn.

Technology news website Re/code cited sources as saying the Yahoo board would focus on the Alibaba spinoff at its meeting, which ends tomorrow.

“As the old saying kind of goes, reports of the impending demise of CEO Marissa Mayer at Yahoo are greatly exaggerated,” Re/Code’s Kara Swisher said.

“And so are rumours that the board of the Silicon Valley internet giant is poised to sell off the entire core business,” she said.

Yahoo’s internet business includes services such as Yahoo Mail and its news and sports sites.

It has been struggling to boost revenue from ad sales in the face of stiff competition from Alphabet’s Google and Facebook.

Yahoo’s shareholders could end up paying roughly $12bn in taxes if the Internal Revenue Service deems the Alibaba transaction to be taxable after the spinoff.

Yahoo has said it wants to proceed with the deal anyway, and close it this month.

Activist investor Starboard Value asked Yahoo in November to drop plans to spin off its stake in Alibaba due to the tax concerns.

It urged the company to sell its core search and display advertising businesses instead.