Yahoo! and Alibaba in US$7bn stock deal

21 May 2012

Alibaba's HQ in Hangzhou, China

Chinese internet giant Alibaba Group is to purchase back a 20pc stake Yahoo! holds in its company as part of a US$7.1bn deal. The deal values Alibaba at US$35bn.

The acquisition – about half of Yahoo!’s stake in the company – sets the company on the road for a potential IPO.

The deal follows months of negotiations. It provides an exit for Yahoo!, liquidity and a return on investment for shareholders.

The deal consists of US$6.3bn in cash and up to US$800m in Alibaba preferred stock.

“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!

“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.”

The Alibaba deal comes after a harrowing period for Yahoo!, when former CEO Scott Thompson stepped down after a furore emerged over claims his CV stated false computer science degree.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years