this is more of a brainstorming thread.
YHOO wants to give most of the proceeds from Alibaba stake to its shareholders. the problem is that they have a massive gain on the investment and therefore they are liable for a significant tax bill.
why doesn't YHOO spin off the Alibaba stake now to the current YHOO shareholders? for instance, through a tailored right issue? they could issue rights to buy Alibaba at the specific price in 1 years time (e.g. tailored to cover only their initial investment, i.e. avoiding a capital gains tax). then all the tax problems would shift to individual investors who can presumably handle it better.
at the same time the YHOO price would likely rise up (as it would become a better proxy for Alibaba IPO) and YHOO could make a secondary issue of common stock raising some cash they "lost" on Alibaba rights? in fact even this could be handled by the same rights issue - basically keeping all in the house...
any thoughts?
YHOO wants to give most of the proceeds from Alibaba stake to its shareholders. the problem is that they have a massive gain on the investment and therefore they are liable for a significant tax bill.
why doesn't YHOO spin off the Alibaba stake now to the current YHOO shareholders? for instance, through a tailored right issue? they could issue rights to buy Alibaba at the specific price in 1 years time (e.g. tailored to cover only their initial investment, i.e. avoiding a capital gains tax). then all the tax problems would shift to individual investors who can presumably handle it better.
at the same time the YHOO price would likely rise up (as it would become a better proxy for Alibaba IPO) and YHOO could make a secondary issue of common stock raising some cash they "lost" on Alibaba rights? in fact even this could be handled by the same rights issue - basically keeping all in the house...
any thoughts?