Yahoo! Inc (YHOO), Alibaba Group Holding Ltd (BABA): Money-Hunting Got No Bounty So Far

Yahoo! Inc. (NASDAQ:YHOO)’s got a $44 billion locked up safe with Alibaba Group Holding Ltd (NYSE:BABA)’s logo on it, but the company cannot figure out the code that will save up to $15 billion tax expenses. Bloomberg approached the issue from different perspectives and identified constraints that might keep Marissa Mayer agitated for a while. A first hypothetical solution would be through creating some kind of Alibaba Group Holding Ltd (NYSE:BABA)-affiliated company, which would be injected with cash from Jack Ma, that will allow Yahoo! Inc. (NASDAQ:YHOO) harvest some money out of it.

“The problem with this is it requires involvement from Alibaba Group Holding Ltd (NYSE:BABA) or another affiliated entity to create a new entity, which would be the value of Yahoo! Inc. (NASDAQ:YHOO)’s stake in Alibaba Group Holding Ltd (NYSE:BABA). In that entity it would require 66% cash and then another operating business,” explained Leslie Picker.

Pondering on this opportunity a bit, and also on the fact that China’s e-commerce mogul has no particular benefit from helping Marissa, one might realize that it’s not going to happen anytime soon. Next on list is the proposal from Starboard Value LP, which is a split of Yahoo! Inc. (NASDAQ:YHOO) in several splinter entities, but there are some drawbacks difficult to cope with.

“It would leave a Yahoo! Inc. (NASDAQ:YHOO) that is much smaller form because so much of their market cap is held in these Asian assets: Yahoo! Japan as well as Alibaba Group Holding Ltd (NYSE:BABA). And so, if they would spin off those Asian assets into a separate company transferring all that value to shareholders, that’s why shareholders like it,” informed Leslie Picker.

Meanwhile, Yahoo! Inc. (NASDAQ:YHOO)’s free riding on Alibaba Group Holding Ltd (NYSE:BABA)’s upswing, which brought the search engine developer almost 35% of value. Its price of approximately $51.75 can ride a little bit more on the back of the Chinese mammoth, but the higher they go the more painful can the fall be.

Disclosure: none
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