Yahoo will spin off all its assets excluding a $31 billion stake in Chinese e-commerce company Alibaba, the company said Wednesday.
Yahoo has been contemplating selling off its Alibaba stake, but ultimately decided not to, citing tax reasons, the company said. The new plan is expected to take more than a year to complete.
"We believe that the previously announced spin off would be tax free to Yahoo and its shareholders," said Maynard Webb, chairman of Yahoo's board of directors, in a statement. "However, in consideration of developments since the original spin off plan was announced and after significant deliberations, we are suspending work on the Aabaco spin off. Among other factors, we were concerned about the market's perception of tax risk, which would have impaired the value of Aabaco stock until resolved."
Once the process is complete, Yahoo will become two separate publicly-traded companies. Current shareholders will have stock in each.
Yahoo has been facing increasing pressure from activist investor Starboard Value. According to the Wall Street Journal, Starboard has been pushing for a sale of Yahoo's core business and said the company would incur a $10 billion tax if it decided to move forward and sell its stake in Alibaba.
"In addition to our efforts to increase value and diminish uncertainty for investors, the ultimate separation of our Alibaba stake will be important to our continued business transformation," Marissa Mayer, CEO of Yahoo, said in the statement. "In 2016, we will tighten our focus and prioritize investments to drive profitability and long-term growth. A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoo's business."
Yahoo is hosting a conference call Wednesday morning to further discuss the news.