The logo of Yahoo is seen in its Hong Kong office in Hong Kong Monday, May 21, 2012. Struggling Internet company Yahoo Inc. has secured a lifeline after agreeing to sell half of its prized stake in Chinese e-commerce group Alibaba for about $7.1 billion, with most of the cash going to shareholders. (AP Photo/Vincent Yu)KELVIN CHAN
HONG KONG (AP) – Struggling Internet company Yahoo Inc. has secured a lifeline after agreeing to sell half of its prized stake in Chinese e-commerce group Alibaba for about $7.1 billion, with most of the cash going to shareholders.
The deal, announced Sunday in the U.S., will see Alibaba Group buying back half of its 40 percent stake from Yahoo Inc. for $6.3 billion cash and up to $800 million of Alibaba preferred shares.
The announcement caps at least a year of rocky on-and-off talks as Yahoo tried to sell the stake as part of efforts to turnaround its business. Money from the sale will give Yahoo the financial firepower to return cash to disgruntled shareholders, many of whom are still upset after it squandered an opportunity to sell itself to Microsoft Corp. in May 2008 for $33 per share, or $47.5 billion. Yahoo’s stock has sagged since then, trading at $15.42 on Friday.
Yahoo said in a joint statement with Alibaba that it plans to return “substantially all” of the after-tax cash proceeds to shareholders. It said its share buyback program had been increased by $5 billion though a final decision on how to return the cash had not been made.