Alibaba buys back $7bn stake in Yahoo
CHINESE internet entrepreneur Jack Ma’s Alibaba Group is buying back up to half of Yahoo’s 40 per cent stake for $7.1bn (£4.5bn) in a deal that moves the Chinese e-commerce leader closer to a public listing.
Under the agreement, Yahoo will sell one-half of its stake in Alibaba for at least $6.3bn in cash and up to $800m in new Alibaba preferred stock. The deal, announced yesterday, caps years of often acrimonious talks between Alibaba and Yahoo over how the Chinese company could reclaim some or all of the stake that Yahoo bought for about $1bn in 2005.
While Ma had a strong rapport with Jerry Yang, the Yahoo co-founder who led the initial investment in Alibaba, ties between the two companies soured when Yang was ousted and replaced as CEO by Carol Bartz.
Relations were also complicated by a spat over the Chinese group’s payment unit Alipay, and Yahoo’s attempt to appoint more directors at Alibaba.
Talks over a deal for Ma, who owns nearly 7.5 per cent of Alibaba, to buy back most of the Yahoo stake for up to $9bn faltered earlier this year over valuation.
The deal came after a management and board revamp at Yahoo, which appointed a new interim CEO in the last week and gave three of 11 board seats to Third Point, the hedge fund run by activist investor Dan Loeb.