Yahoo to sell back 20% of holding to Alibaba Group
New York: 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 USD 7.1 billion.
Yahoo, which bought 40 per cent stake in Alibaba Group in 2005 for about USD 1 billion, will sell 20 per cent of its holding to the Chinese firm.
In an agreement reached yesterday, Yahoo said they would receive USD 7.1 billion from Alibaba composed of at least USD 6.3 billion in cash and up to USD 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 in a statement.
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, which has been struggling to increase its market share, intends to return substantially all of the after-tax cash proceeds to shareholders following the closing of the transaction.
While the form of the return of capital to shareholders has not yet been finalised, Yahoo`s board has increased share buyback authorisation by USD 5 billion concurrently with this transaction.
In addition to the share repurchase deal, the companies have also agreed to amend their existing technology and intellectual property licensing agreement.
Among other things, this amendment will grant Alibaba licence to continue operate Yahoo-China under the Yahoo brand for up to four years at a royalty payment of USD 550 million.
The China based company will also licence certain patents to Yahoo. Yahoo will continue to be represented on Alibaba`s board of directors with the right to appoint one of four existing directors.
Last week, Yahoo CEO Scott Thompson had quit the company amid allegations of manipulating his resume. This was the second time in less than a year, when Yahoo has seen the exit of its CEO.
More from India
More from World
More from Sports
More from Entertaiment
- What Muslims think about Ram Mandir issue?
- Shiv Sena MP Ravindra Gaikwad barred from flying after his assault on AI staffer
- Air India lodges FIR against Shiv Sena MP Ravindra Gaikwad for assaulting staffer
- What Hindu saints think about Ram Mandir issue?
- Yogi Adityanath to visit Gorakhpur for first time today after becoming UP CM
- Hukumdev Narain Yadav to be new Vice-President of India?
- WATCH: Skipper Virat Kohli carries drinks for Team India
- Mulayam Singh Yadav's son Prateek, his daughter-in-law Aparna meet UP CM Yogi Adityanath - Know why
- Yogi Adityanath meets gang-rape survivor, who was forced to drink acid, at Lucknow hospital; two arrested
- Mohammad Kaif takes a subtle dig at Shiv Sena MP Ravindra Gaikwad after he hit Air India official with slippers