Yahoo Inc. plans to spin off its holdings in Chinese e-commerce giant Alibaba in a tax-free deal that would close in the fourth quarter.

The new company would be publically trade and hold Yahoo’s 384 million shares of Alibaba, valued at $40 billion as of Monday’s close. Alababa’s stock slipped 1 percent today to $102.94.

Marissa Mayer, Yahoo’s chief executive officer, said: “Through share repurchases to date, we have returned approximately $9.7 billion of proceeds from Alibaba. Post-spin, using the closing price for Alibaba as of January 26, we will have returned nearly $50 billion dollars of value to our shareholders.”

Yahoo plans to continue to operate its core Web business and also holds a 35.5 percent interest in  Yahoo Japan. Yahoo also said its net profits for the quarter ended Dec. 31 rose to $7.5 billion from $1.4 billion.

Investors approved and sent shares of the company up 7.7 percent to $51.66 in afterhours trading.

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