Report: Alibaba Is Not Interested In Yahoo's Core Internet Business

  • Media publications reported on Wednesday that Yahoo! Inc. YHOO's board of directors will convene to discuss a potential sale of the company's core Internet business.
  • Given Yahoo's $30 billion ownership stake in Alibaba Group Holding Ltd BABA, some investors speculated that Alibaba could be a potential buyer of Yahoo's segment.
  • The Wall Street Journal, citing "a person familiar with Alibaba's thinking," said that the company is unlikely to make a bid for the troubled business.
  • Shares of Yahoo gained more than 5 percent on Wednesday after news reports surfaced that the company's board of directors are convening to discuss a potential sale of its troubled core Internet business.

    Given Yahoo's $30 billion investment stake in Alibaba, some investors may have speculated that the Chinese e-commerce giant would take a closer look at Yahoo's U.S. Internet assets. However, the Wall Street Journal may have put that theory to rest on Thursday.

    Related Link: Why Alibaba May Finance China's Second Most Watched TV Station

    The WSJ Report

    The Wall Street Journal, citing "a person familiar with Alibaba's thinking," reported that Alibaba is unlikely to pursue Yahoo's core business. The source also suggested that the company is also uninterested in acquiring Yahoo's 35 percent stake in Yahoo Japan, which is valued at around $8.5 billion.

    Yahoo's board of directors is also exploring strategies to maximize value out of its investment in Alibaba. The company initially intended to undergo a tax-free spin of its investment, but the tax-free nature of the transaction has been called into question by analysts. Capstone's Max Reale commented in June that the IRS is unlikely to approve the spinoff that is estimated to save the company $11 billion in taxes.

    The Wall Street Journal noted Alibaba would be interested in repurchasing its stock from Yahoo – but only at a "steep discount."

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