Congratulations, Yahoo: you are that much closer to being a pure-play newspaper company. Or rather, that is what your valuation says.
Sunday’s announcement that Yahoo was moving forward in cashing out of Alibaba is good news. The Chinese e-commerce company will buy back half of Yahoo’s 40 per cent stake for at least $7.1bn, $6.3bn of which will be in cash, the rest in preferred stock. The other half of Yahoo’s stake can be sold in, and after, a planned Alibaba IPO.
But despite the removal of a longstanding overhang, Yahoo’s share price barely budged yesterday. The positive news was probably offset by some disappointment that Yahoo could not do a more tax-efficient deal (the company bought the stake for about $1bn and will pay a 38 per cent rate on its gains).