Yahoo plans ‘reverse spinoff’ instead of Alibaba sale

Yahoo said it would seek a "reverse spinoff" that would separate the Internet company's core operations from its holdings in China's online giant Alibaba. The Internet pioneer said the move would create two separately publicly traded companies including one with the Yahoo core which has been struggling. 

Yahoo said it was suspending its previous plan to create a new entity that would hold its multibillion-dollar stake in Alibaba. That deal was envisioned to be tax-free but US officials said they could not guarantee this in advance.

The new plan would transfer Yahoo's assets and liabilities other than the Alibaba stake to a newly formed company, the stock of which would be distributed to Yahoo shareholders. It was not immediately clear what the deal would mean for the core Yahoo operations. Analysts believe that Yahoo would need to vastly scale back some operations or sell the company.

The company has been seeking to revive its fortunes under chief executive Marissa Mayer but the core operations are seen as having little or no value.

Yahoo's market value based on its share price is more than $32 billion, but most of that is based on the value of its Alibaba holdings. The core business includes the company's Internet search component and a range of online advertising and digital media operations.