Yahoo will not spin-off its stake in Alibaba Group Holding, under pressure from investors concerned about the tax risks of the deal.

Yahoo announced that its Board of Directors has unanimously decided to suspend work on the pending plan, announced in January of 2015, to spin off the company's remaining holdings in Alibaba Group Holding Limited. Yahoo's board will evaluate alternative transaction structures to separate the Alibaba stake, focusing specifically on a reverse of the previously announced spin transaction.

In the reverse spin off, Yahoo's assets and liabilities other than the Alibaba stake would be transferred to a newly formed company, the stock of which would be distributed pro rata to Yahoo shareholders resulting in two separate publicly-traded companies.

The new publicly listed company will house Yahoo's Internet business and its 35 percent stake in Yahoo Japan, Yahoo said on Wednesday.

"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. "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. Informed by our intimate familiarity with Yahoo's unique circumstances, the Board remains committed to accomplishing the significant business purposes and shareholder benefits that can be realized by separating the Alibaba stake from the rest of Yahoo. To achieve this, we will now focus our efforts on the reverse spin off plan."

"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," said Marissa Mayer, CEO of Yahoo. "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."

The reverse spin off is expected to require, among other things, third party consents, preparation of audited financial statements, shareholder approval, and SEC filings and clearance, including under the Investment Company Act of 1940. While the company intends to move expeditiously to complete the transaction, it is advised that complex transactions of this kind can take a year or more to conclude.

Yahoo's Chief Executive Officer Marissa Mayer has struggled to find the right strategy to return the company to growth. She unveiled the plan to spin off the Alibaba stake in January, but has been facing criticism from investors.

Yahoo holds about 15 percent of the Chinese e-commerce company - a a worth more than $30 billion. Yahoo’s total market value is about $33 billion.

Yahoo's plan to spin off its stake in Alibaba hit a hurdle in September when the U.S. Internal Revenue Service denied the company's request for a private letter ruling on whether the transaction would be tax-free.