Yahoo!'s (YHOO) Divesting of Asian Assets Will Take Time to Play Out

News that Yahoo! (Nasdaq:YHOO) may be ready to unlock some value for its shareholders by selling off some of its Asian assets is good news, but the tangled assets will take time to unravel and please all the parties involved.

Motley Fool noted, "The beleaguered Internet giant is reportedly in advanced discussions with Japan's SoftBank to unload its 35% share of Yahoo! Japan, which is valued at about $8 billion. SoftBank already owns 42% of the business and is looking to boost its share, as well as free itself of a long bitter relationship with Yahoo!.

"While some investors might shudder at the thought of an additional $8 billion capital infusion for a company that is notorious for bungling acquisitions, it shows that management is willing and ready to unlock value in some of its investments where the company has been much more successful. In fact, the Japanese version of Yahoo! is still the leading search engine in Japan with 50% of the search queries, compared to Google's (Nasdaq:GOOG) 30% share. However, Yahoo!'s search in Japan is actually powered by Google technology, even as Yahoo! has been using Microsoft's (Nasdaq:MSFT) Bing throughout the rest of the world. Yahoo!'s plan to unload its Yahoo! Japan stake is unlikely to be a cash deal because of the complicated tax implications involved.

"I believe an even bigger win for Yahoo! is the 40% stake it built in China's leading e-commerce business Alibaba. These assets include Taobao and Alipay, China's version of eBay (Nasdaq:EBAY) and PayPal. Taobao accounts for nearly 80% of China's rapidly growing e-commerce market, and Alipay recently took over PayPal as the largest online transaction platform in the world. I've written about the importance of these assets to Yahoo! extensively, and the overwhelming undervaluation given to these businesses as implied in Yahoo!'s share price is the main reason the stock is my best idea for 2011."

Yahoo! closed Thursday at $16.86, gaining $16.86, or 1.38 percent.




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