September 19, 2012
Yahoo’s Shares In Alibaba Bought Back As Company Approaches Its IPO
redOrbitStaff & Wire Reports
The company said it has completed an initial repurchase of shares from Yahoo, consisting of a $6.3 billion cash payment and $800 million in preferred shares, and has "restructured its relationship with the Silicon Valley company.”
Alibaba has also made a one-time cash payment of $550 million related to an amendment to the two companies' intellectual property license agreement.
"The completion of the first stage of the Alibaba share repurchase represents a significant milestone for both Alibaba and Yahoo," said Yahoo CEO Marissa Mayer in a press release.
"The execution of the deal was excellent."
Yahoo said it will return $3 billion of the $4.3 billion of after-tax proceeds from the sale to shareholders, in addition to the $646 million down payment the company has already returned through buybacks.
“This yields a substantial return for investors while retaining a meaningful amount of capital within the company to invest in future growth,” Mayer said.
While Yahoo had previously owned about 40 percent of Alibaba Group, it now holds roughly 23 percent of its common stock, which is currently valued at about $8.1 billion. Along with $800 million in preferred stock, Alibaba´s total value is around $8.9 billion.
Alibaba also pointed out that it has the right to repurchase half of Yahoo's remaining stake at the time of its planned IPO.
Yahoo acquired its initial stake in Alibaba Group in 2005 in exchange for $1 billion and the sale of its Yahoo China business.
In May, Alibaba announced a repurchase deal with Yahoo and took its business-to-business e-commerce platform, Alibaba.com, private for $3 billion one month later.
The repurchase deal announced Tuesday is a major step for Alibaba in its bid to become a publicly traded company.
The e-commerce firm has spent the last several months raising funds for the stock buyback, including around $1 billion from Barclays, Citi, Credit Suisse, Deutsche Bank and Morgan Stanley, and additional funds from the China Investment Corporation, the Chinese private equity firm Boyu Capital, Temasek Holdings Pvt. Ltd., and the China Development Bank.
“The completion of this transaction begins a new chapter in our relationship with Yahoo,” said Alibaba chairman and chief executive Jack Ma. “We are grateful for Yahoo´s support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo.”