Yahoo! Inc. (YHOO) Under Pressure From Investors For Tax Effecient Divestment


In an article on CNBC, it was reported that Yahoo! Inc. (NASDAQ:YHOO) investors are pushing Marissa Mayer to divest the company stake in Alibaba and Yahoo Japan in order to make a feasible deal with AOL for a merger. The article quoted Starboard Value, a major investor in Yahoo! Inc. (NASDAQ:YHOO), which thinks that divesting the stakes will help Yahoo! Inc. (NASDAQ:YHOO) increase focus and innovation. Merger of Yahoo! Inc. (NASDAQ:YHOO) core business with AOL can help the company get big deals in the emerging markets as well. The investors are arguing that making a tax-free deal with AOL will save Yahoo! Inc. (NASDAQ:YHOO) around $20 billion in taxes.

Marissa Mayer, the CEO of Yahoo! Inc. (NASDAQ:YHOO) is not opting for this deal, according to the source. She thinks that synergies and divesting will shrink the capital, which cannot be afforded by the company at this moment.

Yahoo! Inc. (NASDAQ:YHOO) core business is worth $7.8 billion but the market cap is around $48 billion. Last month, the company acquired ads platform Brightroll for $640 million. Mayer is looking to consolidate her company instead of divesting or doing adventures. The source said that many investors do not like the approach of Mayer and all the acquisitions she is making because of the fact that the startups Mayer is buying are not profitable apparently. CEO of Yahoo! Inc. (NASDAQ:YHOO) will have to give something to investors sooner rather than later.

Alibaba divestment is going to create some problems for Yahoo! Inc. (NASDAQ:YHOO), said that source. Similarly, Yahoo! Inc. (NASDAQ:YHOO) Japan divestment will also be delayed by Marissa Mayer till next earnings report.

David E. Shaw’s D.E. Shaw & Co., L.P. reported owning about 16.19 million shares in Yahoo! Inc. (NASDAQ:YHOO) by June 30.

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