Yahoo! Inc. (YHOO) Could Be A Potential Acquisition Target After Rolling Off Alibaba Group Holding Ltd (BABA)’s Stakes

Yahoo! Inc. (YHOO)

With its next quarterly earnings just a few days away, Yahoo! Inc. (NASDAQ:YHOO) is attracting a lot of speculations and some investors are considering it an excellent acquisition target provided the company decides to spin off its stakes in Alibaba Group Holding Ltd (NYSE:BABA).

Marissa Mayer, CEO of Yahoo, said in October,

“Many have pointed out the value accretion that would occur if this final tranche were to be taxed upon sale at a lower rate than the previous sales. We are acutely of aware of this. We have the best tax experts in the country, working intensively on structures to maximize the value to our shareholders of our remaining stake in Alibaba.”

As of now, the American tech company owns 384 million shares of Alibaba Group Holding Ltd (NYSE:BABA) with current value of $40 billion. If Yahoo! Inc. (NASDAQ:YHOO) decides to spin off its Alibaba stake, it will become a potential acquisition target for companies like Softbank Corp (TYO:9984) and Tencent Holdings Ltd (HKG:0700) that are looking for ways to enter the American tech industry. For Softbank Corp (TYO:9984), acquiring Yahoo will help it increase its stake in Yahoo Japan. Yahoo! Inc.’s current state in Yahoo Japan is valued at $8 billion.

Yahoo! Inc. (YHOO)

In addition to these speculations, some experts think that the company might need more time to find a tax-efficient way for selling its stake in Alibaba Group Holding Ltd (NYSE:BABA) and Yahoo! Inc. (NASDAQ:YHOO) is likely to provide an update instead of any definitive steps.

Amid all of these discussions, Yahoo’s current business with a market valuation of $8 billion is undertaking steps to improve its revenue streams. The company acquired BrightRoll, which is known for its video advertising platform, for $640 million last year. It is important to consider that the video advertising industry is likely to generate revenues of $8 billion in 2015 with a huge list of advertisers.

This article has been written by Prakash Pandey.

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