Yahoo’s Asian Deal: Talk to the Hand

Yahoo’s (NASDAQ:YHOO) shares have nosedived and the company’s future may be a bit uncertain, as reports circulate that the Sunnyvale, Calif.-based firm has reached an impasse in its talks with its Asian partners, according to the Washington Post and the New York Times.

Quoting people “briefed on the matter,” the New York Times reported that Yahoo’s attempts sell back the majority of its stake in China’s Alibaba and Yahoo Japan have unexpectedly fallen apart for reasons that are not clear.

The companies were trying to negotiate a tax-free transaction, or cash-rich split, during meetings over several days in Hong Kong, the people said. One of the sources said Alibaba’s chief financial officer and lead negotiator, Joe Tsai, told Yahoo’s Timothy Morse that the two parties may have to look for an alternative arrangement.

Yahoo was hoping to raise billions of dollars from the deal to help the online company reorganize its operations. Getting rid of its holdings in China and Japan would save Yahoo more than $4 billion in U.S. taxes, according to the Washington Post.

The talks had been dragging on and the two sides were still weeks away from sealing the deal, with Yahoo still needing official confirmation from the Internal Revenue Service that the transaction would be tax-free. Possible stumbling blocks to the deal reportedly included break-up fees payable to either side if the tax-free deal fell through the value of Yahoo’s stake, which was about $12 billion in December, said the New York Times.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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