To simplify, “Yahoo” will consist of shares of Aabaco (which is basically Yahoo Small Business & Alibaba), while Yahoo’s actual business (advertising & content) will become a new, stand-alone business. Both will become their own publicly traded companies (current Yahoo shareholders will receive an equal stake in whatever Yahoo’s businesses become)—just, not nearly in the way people thought.
According to Re/Code, Yahoo’s Marissa Mayer & CFO Ken Goldman were promised by their tax advisors that a spin-off of Alibaba would come tax-free—a guarantee the IRS was not ready to make.
With the potential tax risk of the Aabaco spin-off, activist investor Starboard Value (the group probably remembered best for it’s 300+ page presentation on Darden Restaurants, owner of The Olive Garden) reversed it’s previous recommendation abruptly, instead calling for a lower-tax sale of its Internet units.
Currently, Yahoo’s market cap is around $33 billion; though, as MarketingLand notes, much of this is tied to the company’s holdings in Alibaba and part-ownership of Yahoo Japan.
The Yahoo reverse spin-off, though not spelled out by the company itself, potentially opens it up for sale to other companies in 2016. The WSJ recently published an article discussing interested parties in Yahoo’s Internet businesses, including Verizon, which recently completed an acquisition of AOL for $4 billion.