Yahoo And Alibaba Finally Agree To Divorce, Chinese Company Will Buy Shares Back For Billions

Alibaba and Yahoo are finally getting a divorce. In a complex, staged transaction Alibaba will be able to buy back all of Yahoo’s minority interest in the company.

When Yahoo was a stronger company, several years ago, it was on good terms with Alibaba CEO Jack Ma. Yahoo invested about $1 billion in 2005 in the Chinese online marketplace.

Then Yahoo CEO Jerry Yang and Ma got along well. However the relationship later soured and Alibaba became eager to regain its shares and be free of Yahoo. For their part Yahoo investors wanted the company to reap value from its Alibaba investment.

Yahoo’s interest in Alibaba and its minority stake in Yahoo Japan are regarded by institutional investors as its most valuable assets — more valuable than the core Yahoo business itself.

Previous talks between Alibaba and Yahoo had stalled over valuation conflicts and Alipay, Alibaba’s payments unit. There had even been talk that Alibaba would try and buy Yahoo with private-equity help at one point.

The deal announced this morning allows Alibaba to buy back half of Yahoo’s stock for $7.1 billion ($6.3 billion in cash proceeds and up to $800 million in Alibaba preferred stock). The remaining Yahoo interest will be sold in a future transaction at or around the time Alibaba goes public.

Yahoo said that most of the after-tax money would be distributed to shareholders.

Related Topics: Channel: Industry | Yahoo | Yahoo: Business Issues


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

Connect with the author via: Email | Twitter | Google+ | LinkedIn

Marketing Day:

Get the top marketing stories daily!  


Other ways to share:

Read before commenting! We welcome constructive comments and allow any that meet our common sense criteria. This means being respectful and polite to others. It means providing helpful information that contributes to a story or discussion. It means leaving links only that substantially add further to a discussion. Comments using foul language, being disrespectful to others or otherwise violating what we believe are common sense standards of discussion will be deleted. You can read more about our comments policy here.

Comments are closed.

Get Our News, Everywhere!

Daily Email:

Follow Marketing Land on Twitter @marketingland Like Marketing Land on Facebook Follow Marketing Land on Google+ Subscribe to Our Feed! Join our LinkedIn Group Check out our Tumblr! See us on Pinterest


Click to watch SMX conference video

Join us at one of our SMX or MarTech events:

United States


Australia & China

Learn more about: SMX | MarTech

Free Daily Marketing News!

Marketing Day is a once-per-day newsletter update - sign up below and get the news delivered to you!