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 The pressure from Starboard Value LP came as Yahoo's board, in a
three-day meeting that started on Wednesday, was reportedly weighing
a number of options for the troubled company.
That includes selling the core business, a source told Reuters,
encompassing features like Mail, its news site and other Web
services.
Alibaba, seen by some as a potential buyer, is unlikely to be
interested, according to the Wall Street Journal. Citing a person
familiar with the matter, the Journal said Alibaba felt the core
business is not attractive, "given the difficulties successive
managers have had in turning it around."
Yahoo's board, which includes co-founder David Filo, Wal-Mart Stores
Inc former Chief Executive H. Lee Scott Jr. and Charles Schwab Corp
Chairman Charles R. Schwab, was also expected to discuss the planned
spinoff of Yahoo's 15 percent stake in Alibaba.
Alibaba will be interested in buying back its shares from Yahoo only
at a steep discount, the WSJ said, citing the person.
After earlier urging the company to spin off the Alibaba stake,
Starboard reversed course. It had first urged the sale of the core
business in a November letter to Yahoo.
It is unclear what the board's decision will mean for the future of
Yahoo Chief Executive Marissa Mayer, who has pushed for the spin-off
of the Alibaba stake but has not publicly commented on the possible
sale of the core business.
Yahoo shareholders could end up paying billions in taxes if the U.S.
Internal Revenue Service deems a spin-off taxable. The company had
sought a private letter ruling from the IRS to confirm a spin-off
would be tax-free, but the agency denied the request in September.
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The board is "seriously considering" pausing on a spin-off until
there is more clarity on the tax implications, Re/code reported,
citing sources.
Yahoo had earlier planned to complete an Alibaba spinoff by the end
of December. But the company said in October the transaction was
expected to close in January.
Alibaba and Yahoo did not respond to requests for comment.
Yahoo's shares were down more than 4 percent in afternoon trading,
and Alibaba was down more than 3 percent.
(Reporting by Anya George Tharakan and Supantha Mukherjee in
Bengaluru; Editing by Kirti Pandey, Stephen R. Trousdale and Dan
Grebler)
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