Yahoo! Inc. (NASDAQ:YHOO) released a statement to fight fears and claims that its decision to spin out the shares it holds in Alibaba Group Holding Ltd (NYSE:BABA) might be in trouble.
Yahoo maintained that the plans are still in place, and nothing has changed regarding the decision. At the beginning of the year, the company made the announcement that it was planning to dispose of its share ownership in the Chinese e-commerce giant, Alibaba. The plan was to hand over the share so it can instead own stake in a spin-out firm known as SpinCo.
The shares purchased from the new company will be handed over pro-rata to Yahoo shareholders. According to Yahoo, these steps will result in the transformation of SpinCo into a publicly listed company.
One of the latest news regarding the matter is a statement made by a U.S government representative from the Internal Revenue Service. The organization claimed that it was reviewing the current existing regulations regarding spinoff firms. He, however, did not reveal whether and how this might influence Yahoo’s procedures because the company’s plans had already been initiated.
Despite the uncertainties, Yahoo shares went down by 7.6% to settle at 40.98 before closing though they went up slightly before the market opened for trading. Analysts say that the results were the lowest that Yahoo has experienced since October last year. In a bid to recover from the drop, the company confirmed its plans to spin off its shares in the Chinese e-commerce company by the end of the year.
The company still maintains that the quote by the IRS representative did not link Yahoo especially. Yahoo further went on to add that the regulations do not affect ruling requests filed in the past.
Yahoo! Inc. (NASDAQ:YHOO) released a comment in response to the statement made by the IRS representative. It will be exciting to see how the response will influence the share performance.