SAN FRANCISCO — Yahoo CEO Marissa Mayer is spinning off the company’s prized stake in China’s Alibaba Group Holding in a move that will enable Yahoo to avoid paying billions of dollars in future taxes.
A newly formed entity called SpinCo will inherit ownership of Yahoo’s 384 million Alibaba shares when the tax-free spin-off is completed toward the end of this year.
Yahoo’s stock gained $3.51, or more than 7 percent, to $51.50 in extended trading after Mayer disclosed her plans for Yahoo’s 15 percent stake in Alibaba.
Yahoo Inc. invested just $1 billion in Alibaba nearly a decade ago, a bargain that subjected the company to massive tax bills as it has whittled its stake during the past three years. Yahoo says it’s able to avoid taxes by spinning off the stake into a separate, independent company instead.
Yahoo shareholders will get shares in the new company.
