Its Alibaba stake, worth more than $30 billion, accounts for the bulk of Yahoo’s current market value of $32 billion.

Yahoo Inc (YHOO.O) shelved plans to spin off its stake in Chinese e-commerce giant Alibaba Group Holding Ltd (BABA.N) on Wednesday, under pressure from activist investors worried about billions of dollars in taxes, and said instead it is looking at creating a separate company to hold the rest of its assets.

The decision, following three days of board deliberations last week, is an explicit rejection of Chief Executive Marissa Mayer’s plan to spin off the Alibaba stake and may cloud her focus on reviving Yahoo’s core business of selling ads on its popular news and sports websites.

Investors were unenthusiastic as they digested the complexity of the “reverse spin-off.” Shares of Yahoo the were lower for most of the trading session, finishing own 1.3 percent at $34.40.

“You’ve got a sinking ship right now,” said Jeffrey Carbone, senior partner with Cornerstone Financial Partners in Cornelius, North Carolina, a former Yahoo shareholder. “Yahoo is just a company in trouble.”

The company, overtaken by Google, Facebook and others since pioneering the commercial web in the 1990s, said it had no plans to sell its core business, as some investors had hoped, but the move effectively invites offers for the new entity.

“There is no determination by the board to sell the company or any part of it,” Yahoo Chairman Maynard Webb said on a call with investors. “We believe that the business remains very undervalued, and we are focused on realizing and unlocking that value.”

The new publicly traded company will house Yahoo’s Internet business and its 35 percent stake in Yahoo Japan (4689.T), worth about $8.5 billion at current exchange rates.

Its Alibaba stake, worth more than $30 billion, accounts for the bulk of Yahoo’s current market value of $32 billion.

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