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Yahoo!'s Deal to Sell Asian Assets Off: Report

Stocks in this article: YHOO EBAY

SUNNYVALE, Calif. ( TheStreet) - Investor dreams have been dashed for the moment as a media report says the deal for Yahoo! (YHOO) to sell its Asian assets is off.

AllThingsD reported Tuesday afternoon that talks between Yahoo! and its Asian partners, Softbank and Alibaba Group, have hit an impasse, and the deal looks to be dead. The report cited undisclosed sources close to the situation.

Yahoo! may be appointing new board members in the near future.

Yahoo! had been trying to sell off its 40% stake in Alibaba and a 34.9% stake in Yahoo! Japan. The company was reportedly trying to engineer a cash-rich split to maximize the value of the stakes, and the transaction was estimated to be worth $17 billion to $18 billion. The split would have been complex transaction that would have allowed Yahoo! to pay no taxes on the stake sale, as long as it received operating assets in return as part of the transaction.

The issues that arose from the latest meetings in Hong Kong appear to be valuation, but it seems as if the initial transaction is off the table. "The cash-rich deal seems dead now," said one source in the report.

Yahoo! has been feeling pressure from major shareholders to increase the share price, including Third Point's Dan Loeb. Loeb has previously criticized the board as being "clowns," and was calling for the resignation of several Yahoo! board members. Co-founder Jerry Yang, Chairman Roy Bostock, Vyomesh Joshi, Arthur Kern and Gary Wilson have all stepped down from the board in recent months.

Yahoo! recently hired a new CEO, Scott Thompson, who was previously the President of PayPal, a subsidiary of eBay (EBAY).

Yahoo! and Third Point could not be immediately reached for comment on this story.

Yahoo! shares fell sharply on the report, losing 6% to $15.02 on volume in excess of 54 million, nearly three times the issue's trailing three-month daily average.

Interested in more on Yahoo!? See TheStreet Ratings' report card for this stock.

Check out our new tech blog, Tech Trends.

-- Written by Chris Ciaccia in New York

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