By Staff Writers, Kshitiz Goliya, Michael Flaherty, Deborah M. Todd and Bill Rigby – Reuters:

Yahoo Inc (YHOO.O) is weighing a sale of its core Internet business and will not sell its stake in Chinese e-commerce firm Alibaba Group Holding Ltd (BABA.N), CNBC reported, with an announcement coming as soon Wednesday.

The moves represent a stark rejection of Chief Executive Officer Marissa Mayer’s plan to sell the $30 billion Alibaba stake and to revive Yahoo’s core Internet unit focusing on growing mobile, video and social media ads. Yahoo could not immediately be reached for comment. Its shares rose more than 2 percent in after-hours trading. Alibaba’s shares rose 1.3 percent.

The latest report followed a three-day meeting of Yahoo’s board of directors last week, which concluded on Friday. Yahoo has faced pressure from activist investor Starboard Value LP to sell the core business rather than proceed with the planned spin-off of its stake in Alibaba, which could trigger large tax payments. In January, announcing the Alibaba plan, Mayer said the deal would be tax-free, but the U.S. Internal Revenue Service has declined to verify that. Taxes related to the spin-off could leave Yahoo shareholders on the hook for $12 billion.

“This was really a really good PR move by Starboard as the spinoff was highly unlikely anyway given the tax implications and they knew they could claim victory once Yahoo made the official announcement,” said Jim Osman of The Edge Consulting Group, a research firm that advises activist hedge funds.

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