Yahoo to proceed with Alibaba spinoff despite lack of IRS ruling
[NEW YORK] Yahoo Inc said it would proceed with the planned spinoff of its stake in Alibaba Group Holding Ltd even though the IRS has declined to rule on whether the transaction will be tax free.
Yahoo's shares rose 4 per cent to US$28.71 in extended trading.
The company said earlier this month the IRS had denied Yahoo's request for a private letter ruling on whether the spinoff of its stake in the Chinese e-commerce giant would be considered tax free.
The spin-off will continue to be subject to certain other conditions including the receipt of a legal opinion on the tax-free treatment of the deal under US federal tax laws, Yahoo said in a regulatory filing on Monday. Investors have closely followed the plans for the spinoff, seeing it as a way to unlock value from the company.
Yahoo, which expects to complete the deal in the forth quarter ending Dec 31, has been trying to revive its core online advertising business by spending more to get users on its websites.
Analysts and shareholders believe the company and its stake in Alibaba would be worth more separately, as long as the spinoff is not subject to tax incurred from selling the shares.
REUTERS
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