Yahoo to sell 20% holding to Alibaba
22 May 2012 5:25 AM GMT
Struggling Internet firm Yahoo Inc has said it will sell half of its stake in Alibaba Group back to the Chinese e-commerce company for $7.1 billion.
Yahoo, which bought 40 per cent stake in Alibaba Group in 2005 for about $1 billion, will sell 20 per cent of its holding to the Chinese firm. Yahoo said they would receive $7.1 billion from Alibaba composed of at least $6.3 billion in cash and up to $800 million in newly-issued Alibaba preferred stock.
As part of the deal, Yahoo would sell the remainder of its Alibaba stake in stages.
‘The deal provides for a staged exit over time (to Yahoo), balancing near-term liquidity and return of cash to shareholders with the opportunity to participate in future value appreciation of Alibaba,’ Yahoo said.
The future monetisation would happen when Alibaba goes public. At the time of the IPO, Alibaba will be required either to repurchase one-quarter of Yahoo’s current stake at the IPO price or allow Yahoo to sell those shares in the IPO.
‘Agreement provides clarity for our shareholders on a substantial component of Yahoo’s value and reaffirms the significance of our relationship with Alibaba,’ Yahoo Interim CEO Ross Levinsohn said.
‘The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future.’ Alibaba group, chairman and CEO Jack Ma said.
Yahoo intends to return substantially all of the after-tax cash proceeds to shareholders following the closing of the transaction.
Yahoo, which bought 40 per cent stake in Alibaba Group in 2005 for about $1 billion, will sell 20 per cent of its holding to the Chinese firm. Yahoo said they would receive $7.1 billion from Alibaba composed of at least $6.3 billion in cash and up to $800 million in newly-issued Alibaba preferred stock.
As part of the deal, Yahoo would sell the remainder of its Alibaba stake in stages.
‘The deal provides for a staged exit over time (to Yahoo), balancing near-term liquidity and return of cash to shareholders with the opportunity to participate in future value appreciation of Alibaba,’ Yahoo said.
The future monetisation would happen when Alibaba goes public. At the time of the IPO, Alibaba will be required either to repurchase one-quarter of Yahoo’s current stake at the IPO price or allow Yahoo to sell those shares in the IPO.
‘Agreement provides clarity for our shareholders on a substantial component of Yahoo’s value and reaffirms the significance of our relationship with Alibaba,’ Yahoo Interim CEO Ross Levinsohn said.
‘The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future.’ Alibaba group, chairman and CEO Jack Ma said.
Yahoo intends to return substantially all of the after-tax cash proceeds to shareholders following the closing of the transaction.
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