Alibaba Deal Brings Cash Haul for Yahoo and Its Shareholders
Alibaba Group has completed a repurchase of a stake in itself that was held by Yahoo, through transactions valued at $7.6 billion, the company said today.
Alibaba, the Chinese e-commerce company, bought back about half of Yahoo's 40% stake for about $7.1 billion, which includes $6.3 billion in cash and $800 million in preference shares in Alibaba Group. It also paid Yahoo $550 million in cash in connection with changes in terms of a technology and intellectual-property licensing agreement. Alibaba Group discussed the deal in a statement today.
Yahoo said before Marissa Mayer became CEO that it would distribute the vast majority of proceeds from the Alibaba stake to shareholders. But the company said last month that Ms. Mayer may reconsider that plan, fueling speculation that the company could use some of the $4 billion-plus after-tax payout for possible acquisitions that could breathe new life into the aging portal.
The monies could also be used to support stepped-up spending on current Yahoo products such as the Right Media Exchange. Company execs told Ad Age earlier this month that Yahoo is accelerating investment in the Right Media Exchange.
UPDATE: Yahoo said in a press release that $3.65 billion -- or 85% -- of the $4.3 billion in proceeds from the Alibaba sale would be returned to shareholders. "This yields a substantial return for investors while retaining a meaningful amount of capital within the company to invest in future growth," Ms. Mayer said in the statement.
Contributing: Jason Del Rey