Yahoo! Inc. (NASDAQ:YHOO) is in talks to sell some of its stock in the internet search giant Alibaba according to sources. According to Bloomberg the company seeks to sell 20% of the stock in the company for around $7 billion. The deal would involve selling the stiock back to Ali Baba itself.
The firm’s top executives have a board meeting today where they will apparently discuss the transaction and approve or deny moving forward on the deal. After the recent upheavals at the firm it is certainly an interesting time to sell the stock. The company’s CEO Scott Thompson left the company after evidence emerged, by way of Third Point’s Dan Loeb, that he has fabricated details and misled on his academic qualifications.
Loeb has fought a long hard proxy war at the company in which he has railed against the firm’s management. That fight appears to be over in the wake of Thompson’s departure. Three of Loeb’s nominees are now sitting on the company’s board. In light of that valueyahoo.com, the site Loeb launched to argue for his vision of the company, now instantly redirects to finance.yahoo.com ousting the contrarian views previously hosted at the address.
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One of Loebs most consistent and pervasive comments about the firm’s low valuation was the lack of worth given to its share in Alibaba.com. It is the biggest web portal in the Chinese market and by virtue of that should attract a lot of interest from Western investors. Loeb has argued that Yahoo’s management have done a bad job of realizing the value of the asset.
Now that he finally has been given a modicum of control at the company he sought a say in for so long Loeb has to face the challenges inherent in the firm’s business in order to increase the value for shareholders. If the board approves the sale of Alibaba it will be left with approximately 20% of the firm and a lot of liquidity for future development.
The money from the sale may be used to develop and expand Yahoo’s core western web portal business which has languished in recent years and fallen behind competitors. Whether the company will be able to rescue its business is something only time will tell but Loeb’s involvement and his commitment to the task must be some cause for confidence.
In trading today the stock was up almost 6% rivaling the rally in Facebook (NASDAQ:FB) shares on their opening day.