Many of the unfortunate investors who are stuck with shares of Yahoo want the company to sell its core internet business as quickly as possible, even if it means taking a major tax hit. As the company’s core internet division is rapidly declining in value, investors are screaming that a quick sale is the best option. The Yahoo internet division includes Yahoo Sports, several news sites and Yahoo email.
The current plan for Yahoo is to conduct a tax-free corporate spin-off that would likely take several months to complete. During this time, the company would undoubtedly continue to fall in value. Now investors are thinking that simply taking a major tax hit by selling the internet division might be a better idea. Major shareholders have already sent messages to the Yahoo board of directors expressing their concerns. The shareholders are demanding that Yahoo sell off its core internet business as fast as the company can. Estimates show that a corporate spin-off would take about a year to complete.
Over the past year, Yahoo stock has fallen by 36%. Even with this major decline, investors are still worried that the stock will continue to experience heavy losses in the near future. Additionally, some analysts are questioning whether or not the Internal Revenue Service would allow a tax-free corporate spin-off to be conducted in the first place. Even with the spin-off, Yahoo might still be stuck with a heavy tax bill. Yahoo was previously planning to sell its prized stake in Chinese e-commerce company Alibaba until the IRS refused to confirm that the sale could be conducted without taxes.
Major Yahoo shareholders urging the company to complete an immediate sale include Starboard Value LP, Canyon Capital Advisors and Mission Capital. Meanwhile, other shareholders have expressed concerns regarding Yahoo CEO Marissa Mayer, saying that she has no real plan to revive the struggling company. Mayer has been heavily criticized for ineffective acquisitions, most notably Tumblr, which it purchased for $1.1 billion.
Estimates show that Yahoo’s core internet services could be sold for around $5 billion. The associated taxes could be as high as $1 billion.