Sunnyvale, Calif.—In an apparent end to months of wrangling, Yahoo Inc. and Alibaba Group Holding, a Chinese e-commerce company for small businesses, have reached an agreement in which Yahoo will receive at least $7.1 billion in cash and preferred stock for selling half of its stake in Alibaba. Half of Yahoo's stake in Alibaba is about 20% of the company overall.
The agreement also outlines a path for Yahoo to further monetize its holdings in the company in an eventual Alibaba initial public offering. Additionally, Yahoo agreed to grant Alibaba a transitional license to continue to operate Yahoo China under the Yahoo brand for up to four years. As part of the agreement, restrictions on Yahoo's ability to make other investments in China will be terminated.
“Today's agreement provides clarity for our shareholders on a substantial component of Yahoo's value and reaffirms the significance of our relationship with Alibaba,” said Ross Levinsohn, interim CEO of Yahoo, in a statement. “We look forward to continued collaboration with the Alibaba team on business initiatives as we explore joint opportunities for growth and benefit from Alibaba's future.”