ni-co Posted July 20, 2015 Share Posted July 20, 2015 Those BABA shares will be "stuck" inside SpinCo the same way they are stuck inside YHOO. Any type of value creating transaction that I can think of will trigger the tax liability. For example, BABA could buy SpinCo, but if it wants to retire the BABA shares held by SpinCo then it would have to take those shares out of SpinCo, and to do so would trigger the tax. As a result, if BABA were to purchase SpinCo with an eye towards retiring the shares, the purchase price would include a discount that would reflect the tax liability. Meaning thst YHOO holders are essentially paying the tax through the reduced purchase price. I agree with you on all your points ref the tax basis in SpinCo's shares of BABA. You won that argument handily and were correct on all accounts. Are you two guys sure that BABA will have to pay taxes on the step-up if it wants to retire the SpinCo (now: "Aabaco Holdings") shares? There was a comment below Matt Levine's article on the spin-off that I found very interesting: An acquisition of SpinCo by Alibaba would create an offshore entity not subject to US taxes on it's China profits. Any elements of SpinCo that Alibaba can actually use, or is currently using, could likewise be moved offshore, thereby exempting a $40 billion Chinese fortune from paying US taxes, on business that it transacted within China. The driving force behind an Alibaba acquisition of SpinCo, will be the tax consequences to Alibaba. They could use the BABA Cayman Islands trust to issue BABA common shares and swap them for SpinCo shares, sometime in 2016. Only the US-taxable portion of BABA's activities would then be subject to US taxes. Dilution of BABA may not be a serious issue, as there's an appetite for BABA stock. I'm no specialist on US tax law but this sounds like a reasonable thing YHOO's tax lawyers may have thought about, doesn't it? Link to comment Share on other sites More sharing options...
ni-co Posted July 23, 2015 Share Posted July 23, 2015 Ok. I'm back into this one – I just couldn't resist. Because of their meh results YHOO ex BABA was for sale @ $4.80… Cash is $7.40, Yahoo Japan is $8.80 per share. Even if you discount BABA and Japan by 30% (!) you can buy core YHOO for $1.60. If the spin-off goes through and you discount both by 10% for buying Yahoo … you get paid $7 in cash and receive YHOO core as a gift – " " This is just plain crazy. People must have been squeezed out of their BABA shorts after the YHOO results. By the way, to reduce my leverage I bought deep in the money puts on BABA instead of shorting it outright. Link to comment Share on other sites More sharing options...
thepupil Posted August 12, 2015 Share Posted August 12, 2015 I think Yahoo is very attractive here at 70% of pre-tax NAV 92% of post-tax NAV 103% of post-tax Yahoo worth nothing NAV 126% of post-tax Yahoo worth nothing, net cash goes away NAV Non-BABA components comprise close to 60% of the market cap of Yahoo now. Hopefully BABA will continue to fall and these will become even more meaningful. Link to comment Share on other sites More sharing options...
plato1976 Posted August 30, 2015 Share Posted August 30, 2015 How do you get $7 per share cash? I see Cash And Cash Equivalents 1,188,169 (thousands) Short Term Investments 4,636,152 and they do have debts Ok. I'm back into this one – I just couldn't resist. Because of their meh results YHOO ex BABA was for sale @ $4.80… Cash is $7.40, Yahoo Japan is $8.80 per share. Even if you discount BABA and Japan by 30% (!) you can buy core YHOO for $1.60. If the spin-off goes through and you discount both by 10% for buying Yahoo … you get paid $7 in cash and receive YHOO core as a gift – " " This is just plain crazy. People must have been squeezed out of their BABA shorts after the YHOO results. By the way, to reduce my leverage I bought deep in the money puts on BABA instead of shorting it outright. Link to comment Share on other sites More sharing options...
krazeenyc Posted September 8, 2015 Share Posted September 8, 2015 Hmm.... http://www.marketwatch.com/story/yahoo-drops-effort-for-tax-free-spinoff-of-alibaba-stake-2015-09-08?siteid=yhoof2 The funny thing is.... that's not quite what the filing says. http://www.sec.gov/Archives/edgar/data/1011006/000119312515314494/d35793d8k.htm Certainly not good news, but the article does not accurately describe what's going on. Link to comment Share on other sites More sharing options...
thepupil Posted September 8, 2015 Share Posted September 8, 2015 yep, certainly not good, but not a "drop of the plan" Link to comment Share on other sites More sharing options...
thepupil Posted September 10, 2015 Share Posted September 10, 2015 http://www.bloombergview.com/articles/2015-09-09/yahoo-s-alibaba-spinoff-is-in-tax-limbo per usual, matt levine with clear, concise and insightful commentary Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 2, 2015 Share Posted December 2, 2015 Anyone looking at YHOO? Link to comment Share on other sites More sharing options...
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