Aabaco will consist of about 15% ownership of Chinese e-commerce giant Alibaba, along with a Yahoo segment that delivers cloud services to small businesses.
“Under the spinoff plan, announced on January 27, 2015, Yahoo plans to distribute all of the outstanding shares of Aabaco Holdings pro rata to its shareholders”, according to Yahoo.
Aabaco will operate as a closed-end fund. Its investment objective “is to seek returns for its stockholders primarily through owning the Alibaba shares”, the filing said. In after-hours trading, Yahoo’s stock is up a little over a percentage point. That stake is now worth about $32 billion.
Removing Alibaba equity from Yahoo severs Yahoo from Alibaba.
A successful spinoff is crucial for Marissa Mayer, whose three-year stint as Yahoo CEO has yet to kickstart growth.
Sunnyvale, California-based Yahoo expects the spinoff to close in the fourth quarter. Yahoo noted the risk that the agency may not issue a favorable ruling, or that administrative guidance “could adversely impact the tax-free treatment”.