Yahoo selling part of Alibaba for US$7.1bn

Yahoo has agreed to allow Alibaba to buy back 20 per cent of its shares for approximately US$7.1 billion.

In a statement released today (PDF), Yahoo stated that both companies have embarked on a "staged and comprehensive value-realisation plan" for Yahoo's stake in Alibaba, marking the winding down of a seven-year partnership. The first step in this plan would be completing the 20 per cent sale for US$6.3 billion in cash, and up to US$800 million in newly issued Alibaba preferred stock.

Yahoo may subsequently monetise its remaining interest in the Chinese e-commerce company in stages, it stated. For instance, at the time of an initial public offering (IPO) by Alibaba, the company will be required either to repurchase one quarter of Yahoo's current stake at the IPO price, or allow Yahoo to sell those shares in the IPO.

Following the public listing, the US web company has registration rights and rights to marketing support from Alibaba to enable it to dispose of its remaining shares at times of Yahoo's choosing.

"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, in the statement.

Besides the shares transaction, both companies have also agreed to amend their existing technology and intellectual property licensing agreement. These include Yahoo granting Alibaba a transitional licence to continue operating Yahoo China under its branding for up to four years, while restrictions on Yahoo's ability to invest in other China projects will be terminated. The Chinese company will make an upfront royalties payment of US$550 million to Yahoo, and continuing payments for the duration as a licensee.

Alibaba will also license certain patents to its US counterpart, the statement added.

Via ZDNet Asia