Yahoo Inc filed formal documents late on Friday to spin off its 15 percent stake in Alibaba Group Holding Ltd (阿里巴巴), the Chinese e-commerce giant, in the fourth quarter of this year.
However, in the filing with the Securities and Exchange Commission, the Internet company warned shareholders that it might cancel the spinoff if US federal tax authorities failed to provide written assurance in advance that the transaction would be tax-free to shareholders.
Yahoo’s 384 million Alibaba shares are currently worth about US$32 billion.
The spinoff, announced in January, is intended to transfer the value of that stock to Yahoo’s shareholders without incurring the capital gains tax of more than US$10 billion that would be due if Yahoo simply sold the stock and returned the cash to its shareholders.
Key to the plan is Yahoo’s intention to include its small-business services division in the spinoff, which is to be called Aabaco Holdings.
Under federal law, such spinoffs must include an operating business, not just stock holdings, to qualify for tax-free status. Historically, companies have bundled tiny businesses with huge stock portfolios in their spinoffs to meet the letter of the law.
However, a US Internal Revenue Service (IRS) official in May said that the government was considering tightening the rules, potentially affecting the Yahoo plan.
In its securities filing on Friday, Yahoo said that Chinese tax authorities had imposed new rules in February that would potentially subject such transfers to a 10 percent tax, and there has been little guidance on how to interpret those rules.
Yahoo chief executive Marissa Mayer has sought to reassure shareholders that the deal would proceed as planned, but the company’s stock has fallen as Wall Street worried that the deal might not pass muster with the IRS.
Mayer is sure to face questions about the transaction on Tuesday, when she holds a Web cast with analysts to discuss the company’s second-quarter financial results.
In its filing, Yahoo acknowledged the risks and gave itself the option of canceling the deal.
If it does proceed with the spinoff, but tax authorities later impose a hefty bill, Yahoo said that Aabaco — and indirectly, its shareholders — would have to pick up the costs.
Yahoo did not name an executive team or board for Aabaco, nor did it provide details of the small-business unit that it plans to include in the company.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
RSS