Yahoo chairman to step down, future of Asian assets unresolved
Yahoo is replacing its chairman and three other directors as it continues to restructure its business, a process that includes the potential spin-out of its Asia-based assets to a consortium comprising Alibaba Group, Softbank and some private equity players.
The board has come under fire from investors over its perceived indecisiveness in dealing with the overhaul. The company announced on Tuesday that Roy Bostock, its chairman, would be stepping down along with three other directors, Reuters reported. Alfred Amoroso, former CEO of Rovi Corp and a long-time employee of IBM, and Maynard Webb, ex-COO of eBay, have been named independent directors.
Bostock said in a letter to shareholders that the board has examined proposals regarding equity investment in the company - supposedly from several private equity firms - but so far none had been deemed sufficiently attractive. "We are also in active discussions with our partners in Asia regarding the possibility of restructuring our holdings in Alibaba Group and Yahoo Japan. The complexity and unique nature of these transactions is significant," he added.
Yahoo owns 40% of Alibaba and 35% of Yahoo Japan - with Softbank holding most of the remainder - and the two Asian companies have bid around $17 billion for both stakes. The Alibaba stake was valued at $13 billion last September but the Chinese firm wants to pay less than that, saying that tax savings would justify the discount.
Under the most recent proposal, Yahoo would transfer most of its Alibaba stake and all of its Yahoo Japan stake to the Asian firms and receive stock in specially constructed subsidiaries containing cash and assets in return. Under US tax law the transaction wouldn't be considered a sale, so no taxes could be levied on it.
Alibaba has already approached lenders about financing part of the transaction, reportedly seeking around $4 billion. A leveraged finance source told AVCJ that although it is essentially a corporate transaction, a number of private equity sponsors are likely to feature in the bond issue.
"It would be one of the largest leveraged structured financings that this market will see for a long period of time," the source added.
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