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NEW YORK (
Yahoo!(YHOO - Get Report) may be getting closer to a
deal for its Asian assets, according to
The New York Times.
In an interview, Eric Jackson of Iron Fire Capital said the company is exploring what is known as a cash-rich split. "Yahoo! is going to spin off the stakes they hold in
Yahoo! Japan for almost $17 billion," Jackson said. He also mentioned the Yahoo! Japan stake is worth around $6.5 billion, and the 40% stake Yahoo! owns in Alibaba is worth almost $13 billion, so essentially, Yahoo's core operations and cash are being valued at next to nothing.
In order to do this deal in a tax-efficient manner, there has to be other assets thrown in, so that investors will be able to realize the monetization of these stakes without paying a huge tax bill, Jackson noted. Jackson is long Yahoo! shares.
With regards to the other assets that have to be thrown in, the article mentioned that Yahoo! would keep 15% of its stake in Alibaba, the Chinese Internet company.
Yahoo!'s board has reportedly been looking at offers from private equity companies like
Silver Lake about a private investment in a public entity (PIPE)
angered hedge fund Third Point and forced Third Point's Dan Loeb to write a letter to the board of directors. Third Point owns 5.2% of Yahoo!'s outstanding stocks.
If an Asian asset spin were to happen, it would cut against earlier reports of previous bids by private equity giants like
THL Partners and
TPG Capital for a minority 20% stake interest in Yahoo!
The newest rumor of an Alibaba-led consortium should be no surprise. The company's founder Jack Ma has openly expressed his interest in buying back Yahoo's 40% stake in Alibaba, while Softbank has said it wants to purchase Yahoo!'s 35% stake in Yahoo Japan.