Following its earnings release, Yahoo commented today on the forthcoming spinout of its Alibaba equity stake as a new firm, Abaco Holdings. The parent firm stated that it’s making “good progress” on the deal, and that it will “strive to complete” the transaction in the fourth quarter of this year.
However, CEO Marissa Mayer warned that the deal may conclude next January.
Later in the call, the Yahoo CFO Ken Goldman said that if the company’s legal council signs off on the deal’s tax status, it will proceed, even without specific approval by relevant government entities. Yahoo promised more updates on its next earnings call.
Shares of Yahoo gyrated today in after-hours trading. During the Abaco Holdings portion of its earnings call, Yahoo briefly traded higher than its end-of-day price. The company initially fell a few points after reporting a profit, and revenue miss during its third quarter.
That was initially tempered by quietly announced news in its release that Google is now a search partner for Yahoo. The Yahoo-Microsoft deal has long been financially rocky. That fact, coupled with Mayer’s prior tenure at Google itself make the new partnership roughly as surprising as a sunrise.
The executives fielded a number of questions concerning the Abaco Holdings spin out. The inquiries mostly focused on the potential tax implications of the deal, which remains in some doubt. Which company would pay any potential tax bill was surfaced, for example. As currently structured, the answer is Abaco Holdings. That would diminish the value of the spun out asset, but also protects Yahoo from any negative effect on its operational health.
According to the CFO, Yahoo “can see the goal line of wrapping the deal.” Now we wait.