Yahoo Inc (NASDAQ: YHOO) shares rose on Tuesday after the company said it would go ahead with the planned spinoff of its stake in Alibaba Group Holding Ltd (NYSE: BABA) despite the risk that the deal might not be tax free.
Shares of Yahoo, which said this month that the U.S. Internal Revenue Service (IRS) had denied its request for a private letter ruling on a possible tax-free deal, rose $1.35, or 4.9%, to $28.95 U.S. in mid-morning trading Tuesday. The stock trades in a 52-week trading range of $27.20 U.S. to $52.62 U.S.
Mizuho Securities cut its price target on Yahoo's stock to $40.00 U.S. from $43.00 U.S., based on Alibaba's lower valuation, joining several other brokerages in doing so.
Yahoo Chief Executive Marissa Mayer has been under intense pressure from shareholders to spin off its stake in the Chinese e-commerce giant.
The 15% stake is worth nearly $23 billion U.S., as much as Yahoo's market value, having halved this year as Alibaba's stock has slumped 45%. Yahoo's shares are also down 45%.
At a 40% rate, tax on the spinoff would be around $9 billion U.S.
Alibaba American Depositary Shares opened Tuesday trading up 98 cents, or 1.7%, from Monday's close to $59.37 U.S., within a 52-week range of $57.32 U.S. to $120.00 U.S.
Tech Insider
