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Yahoo to spin off Alibaba stake

By Aileen Graef
Marissa Mayer, CEO, President and Director of Yahoo!, said she decided in August to spin off the Alibaba holding. UPI/Molly Riley
Marissa Mayer, CEO, President and Director of Yahoo!, said she decided in August to spin off the Alibaba holding. UPI/Molly Riley | License Photo

CUPERTINO, Calif., Jan. 28 (UPI) -- Yahoo Inc. announced Tuesday it would spin off its nearly $40 billion stake in Alibaba Group Holding after facing increased pressure from shareholders.

Its 15.4 percent holding of the company will be put into a separate and newly formed company named SpinCo. The company will be then given to current Yahoo shareholders.

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Yahoo posted fourth-quarter earnings at $166 million, which is a 52 percent decrease from last year. The spin off is an effort to avoid a large tax bill on its Alibaba holdings but also to turn around the company in the long run. Shareholders praised the move for both these reasons.

"We homed in on the spinoff structure over the summer and we basically spent the fall really refining it," CEO Marrissa Mayer told the Wall Street Journal. "There were a lot of variations on the way to do the spin, what was included in the spin, was it a reverse spin or a straightforward spin, which is what we ultimately chose."

It will allow Mayer and investors to focus on the core business for Yahoo as she tries to accelerate the growth of mobile ad revenue, which showed a profit for the first time last quarter.

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Yahoo stock jumped 6 percent in trading Tuesday after the closing bell on U.S. markets.

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