Alibaba unlikely to be interested in Yahoo’s core business: Report

By: | Published: December 3, 2015 11:08 PM

Alibaba Group Holding Ltd is unlikely to be interested in buying Yahoo Inc's Internet business, the Wall Street Journal reported.

Chinese e-commerce giant Alibaba Group Holding Ltd is unlikely to be interested in buying Yahoo Inc’s Internet business, the Wall Street Journal reported.

Yahoo’s board, in a three-day meeting that started on Wednesday, is weighing a sale of the struggling business, Reuters reported on Tuesday, citing a source.

The business isn’t attractive, “given the difficulties successive managers have had in turning it around,” WSJ reported on Thursday, citing a person familiar with the matter.

“There is almost certainly no buyer who would realistically retain the existing management,” Pivotal Research Group analyst Brian Wieser said. He also said that U.S.-centric digital advertising had evidently not been Alibaba’s focus.

Yahoo’s board, which includes co-founder David Filo, Wal-Mart Stores Inc former Chief Executive H. Lee Scott Jr. and Charles Schwab Corp Chairman Charles R. Schwab, is also expected to discuss the planned spinoff of Yahoo’s 15 percent stake in Alibaba.

Alibaba will be interested in buying back its shares from Yahoo only at a steep discount, the WSJ said, citing the person.

Yahoo shareholders could end up paying billions in taxes if the U.S. Internal Revenue Service (IRS) deems the spinoff taxable. The company had sought a private letter ruling from the IRS to confirm if the transaction would result in a tax obligation, but the IRS denied the request in September.

Activist investor Starboard Value LP said Yahoo’s board should “immediately abandon” the spinoff and begin a “competitive process to sell its valuable core business at the highest price possible.”

The board is “seriously considering” pausing on the spinoff until there is more clarity on the tax implications, Re/code reported, citing sources.

Yahoo had earlier planned to complete the spinoff by the end of December, but the company said in October the transaction was now expected to close in January.

Alibaba and Yahoo were yet to respond to requests for comment.

Yahoo’s shares were down 1 percent at $35.25 in late morning trading. Alibaba shares were down 1 percent at $84.07.

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