Yahoo sells half of its stake back to Alibaba, which heads towards its IPO
Alibaba Group has bought back half the stake that Yahoo owned in it, completing a $7.1 billion (£4.37bn) transaction.
The two companies agreed the deal back in May, which allowed Alibaba to move closer to an initial public offering (IPO). The Chinese e-commerce giant has paid Yahoo $6.3 billion (£3.9bn) in cash and $800 million (£493m) in preferred shares in the Alibaba Group.
Alibaba will also make a one one-off cash payment of $550 million (£339m), relating to a change in the two companies’ intellectual property licensing agreement.
The money raised from the sale will be used to appease disillusioned Yahoo shareholders. The troubled Internet giant will retain 23 percent of common stock, which, when combined with its new preferred shares, amounts to an $8.9 billion (£4.5bn) stake in Alibaba.
The Chinese company has said that it has the right to buy back half of Yahoo’s remaining stake at the time of its IPO. Yahoo originally acquired its 40 percent stake in return for $1 billion (£616m) in cash and the sale of its Yahoo China business to Alibaba, which had later been touted as a potential buyer for the whole of Yahoo.
“The completion of this transaction begins a new chapter in our relationship with Yahoo,” said Jack Ma, chairman and CEO of Alibaba Group. “We are grateful for Yahoo’s support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo. I look forward to working with Marissa Mayer and her team in our continued partnership.”
Earlier this week, Alibaba accused Google of pressuring Acer into cancelling the launch of a smartphone running Aliyun, a Linux operating system designed for China. Google said that the platform was a forked version of Android but was incompatible with most Android software, something that would violate Acer’s membership of the Open Handset Alliance (OHA).
What do you know about Yahoo? Find out with our quiz!