Greg Sterling says, “In a reversal, Yahoo announced this morning that it will abandon its planned spinoff of its remaining Alibaba shares and instead do a “reverse spinoff” of the rest of Yahoo. The reason the Alibaba spinoff was scrapped was uncertainty over tax liability.

Originally, Yahoo thought the Aabaco (Alibaba + Yahoo Small Business) spinoff would have limited or zero tax implications for the company. But the Internal Revenue Service declined to provide that reassurance, creating uncertainty and resulting in today’s decision. The Alibaba shares will still be separated from the main Yahoo business, resulting in two publicly traded companies — just not in the way originally intended.

Here’s an excerpt from Yahoo’s public statement:

Yahoo! Inc. today announced that its Board of Directors, after careful review and consideration of how to best drive long-term value for shareholders, has unanimously decided to suspend work on the pending plan, announced in January of 2015, to spin off the company’s remaining holdings in Alibaba Group Holding Limited”.

Yahoo Announces It Will Spin Out Main Business Rather Than Alibaba Assets

Marketing Land

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