Yahoo! (YHOO) Closes Initial Stake Sale w/ Alibaba; Receives $7.6B

September 18, 2012 2:27 PM EDT Send to a Friend
Yahoo! Inc. (Nasdaq: YHOO) has closed the initial sale of shares in Alibaba Group Holding Limited. At closing, Yahoo! received approximately $7.6 billion, $6.3 billion in cash and $800 million in preferred shares of Alibaba in exchange for half of Yahoo!’s 40 percent stake in Alibaba, as well as a payment of $550 million for a technology and intellectual property license agreement. Net cash proceeds after taxes and fees from the first stage of the repurchase agreement total approximately $4.3 billion.

Yahoo! will return approximately $3.65 billion in after-tax proceeds to shareholders, or 85 percent of the net cash proceeds from the initial sale of its shares in Alibaba. This amount includes $646 million the company has already returned to shareholders through share repurchases since the announcement of the transaction, as well as an additional $3.0 billion.

After accretion from the Alibaba share repurchase, Yahoo! continues to own approximately 23 percent of Alibaba Group common stock, valued at $8.1 billion based on this most recent round of funding. Together with its preferred stock, the implied valuation of Yahoo!’s entire remaining stake is approximately $8.9 billion.

Under the terms of the agreement with Alibaba, the second phase allows for Yahoo! to monetize approximately half of its remaining stake at the time of an initial public offering (IPO) of Alibaba. After an IPO, Yahoo! has the right to sell its remaining shares at its discretion following a customary lock-up period.


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