The things other than their holdings (Alibaba, Yahoo Japan, cash) have a substantial negative net worth. Literally if they shut everything else down, or spun it off, their market cap would go up by $12bn.

This creates friction with investors. They'd like access to the value of those holdings without them being used to fund what they see as a losing wager. That's why Yahoo in worth $12b less than the value of their assets.

By spinning off Yahoo, people who don't think it to be a losing bet could invest in it. They think that with time they could turn it around into a sellable asset worth considerably more than if they sold it today. But investors currently don't want to wait for that to happen because they don't like the management team and think they'll just hemorrhage money.