Yahoo! gets! $7.1bn! injection! from! Alibaba! stake! sale!
Web biz flogs tasty slice of online tat bazaar
Chinese e-commerce biz Alibaba has signed a deal to buy back half of Yahoo!'s 40 per cent stake in the company, marking the beginning of the end of their partnership.
The web bazaar will fork out $7.1bn (£4.4bn) for the 20 per cent holding with the option to grab back the remaining stake if it later goes public with its stock. Yahoo! will give up half of its stake now for at least $6.3bn in cash proceeds and up to $800m in newly-issued Alibaba preferred stock.
At the time it launches an IPO, Alibaba will either have to buy a quarter of the remainder of the holding or let Yahoo! sell the shares. After that, Yahoo! has the right to sell the rest of its stocks whenever it fancies as long as it's after the usual lock-up period directly after Alibaba's market debut.
The Chinese firm, headed by entrepreneur Jack Ma, has been trying for years to take back the stake that Yahoo! bought for $1bn back in 2005 as the partnership went sour.
Last year, the firms had quite the falling out over Alibaba's spinoff of its payment business Alipay. The Ma's team had chopped out the PayPal-like division the year before that, but Yahoo! decided it was ticked off about it and said that the transaction had happened without its approval.
The dispute was eventually settled, but it was another reason for Alibaba to seek a divorce.
Yahoo! also wanted the stake selloff, but has been holding out to squeeze the most it can get out of Alibaba. Yahoo! was under a lot of pressure from investors to sell its holding and put some money in their pockets.
Yahoo! said that it "intends to return substantially all of the after-tax cash proceeds to shareholders" once the deal is done.
Alibaba will continue to run Yahoo! China under the Yahoo! brand for up to four years as part of a technology and intellectual property cross-licence, which will also include the company stumping up $550m in royalty payments upfront and more money for the next four years. ®