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July 20, 2015

Yahoo to create Aabaco by spinning off stake in Alibaba

Aabaco will hold approximately 384 million shares in Alibaba.

By CBR Staff Writer

Yahoo has filed an application to spin off its interest in Chinese e-commerce firm Alibaba to an independent new company, called Aabaco Holdings.

Aabaco will hold about 384 million shares of Alibaba Group, representing a stake of about 15%.

It will also have a 100% ownership stake in Aabaco Small Business, which was formed in connection with the spin-off and will acquire the assets and assume the liabilities associated to Yahoo Small Business.

Yahoo shareholders will receive all of the shares of the new investment firm, with transactions expected to be completed by the fourth quarter of this year.

In 2005, Yahoo invested $1bn in Alibaba, and it sold 140 million shares of the Chinese e-commerce giant during Alibaba’s IPO which helped Yahoo reap $9.4bn before tax.

The completion of the spin-off is conditioned upon the receipt by Yahoo of the IRS Ruling, which ruling shall remain in full force and effect.

It shall not have been modified or amended in any respect adversely affecting the US federal income tax treatment of the spin-off.

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