Yahoo Just Set the Stage to Sell Nearly Its Entire Business

Yahoo CEO Marissa Mayer in May 2013.

Photo by Emmanuel Dunand/AFP/Getty Images

Yahoo wants to spin off, well, Yahoo. The ailing company has finally put speculation to rest over a plan to build a new company to hold either its 15 percent stake in Chinese e-commerce giant Alibaba or its entire Internet business. In a press release Wednesday morning, the company said it will evaluate doing the latter—that is, creating a new publicly traded company that would comprise all of its properties except the Alibaba holdings.

Concerns over Yahoo’s potential tax bill led the board to agree on this “reverse spinoff” approach. Yahoo was unable to get an answer from the IRS about whether separating its lucrative Alibaba stake could count as a tax-free transaction or whether it would lead to a hefty bill. Maynard Webb, the chairman of Yahoo’s board of directors, said in a statement, “Informed by our intimate familiarity with Yahoo’s unique circumstances, the Board remains committed to accomplishing the significant business purposes and shareholder benefits that can be realized by separating the Alibaba stake from the rest of Yahoo.”

It could take a year to complete the spinoff, but whenever it’s done, Yahoo will presumably be looking for a buyer like a media company, a telecom (remember when Verizon bought AOL in May?), or a private equity firm. As my Slate colleague Jordan Weissmann pointed out last week, it may be difficult for Yahoo to lure or hold on to top tech talent while on the auction block or once it’s in other hands. But at this point, the company’s focus is just fixing its business woes.

So what’s the plan for 2016? “We will tighten our focus and prioritize investments to drive profitability and long-term growth,” said Yahoo CEO Marissa Mayer. “A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoo’s business.” Sounds good, because it’s unclear whether that business is worth anything at all.