Earlier in February this year, there was talk about Alibaba picking up Yahoo, but that did not materialize. Well, we do know that Alibaba is one the larger companies in China that can be considered to be a market leader, and they have just purchased back half the stake that Yahoo Inc. owned in the company, forking out approximately $7.6 billion in the process, which would also be a strategic move in helping them edge closer towards the possibility of floating Alibaba on the stock market via an initial public offering.
According to Alibaba, they handed Yahoo around $6.3 billion in cash and $800 million in preferred shares in Alibaba Group, not to mention also going through a one-time cash payment of $550 million that has something to do with the amendment of both companies’ intellectual property license agreement.
Yahoo responded by returning shareholders $3 billion of the $4.3 billion of after-tax proceeds from the sale, which is separate from the $646 million downpayment that it has already returned to its shareholders via buybacks. After the dust had settled, Yahoo will still own around 23% of Alibaba’s common stock that remains valued at $8.1 billion thereabouts.
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