On Tuesday, China's Alibaba Group said that it had bought back
around half of the stake that U.S. internet company Yahoo! (NASDAQ:
) owns in the firm, paying about $7.6 billion. According to
Reuters, the deal was completed with the funding support of eight
international banks, including Barclays, Citigroup, Credit Suisse,
Deutsche Bank, Morgan Stanley and the China Development Bank. The
remaining cash was procured through an issue of preferred shares in
Alibaba Group. Yahoo! had held a 40 percent stake in the Asian
company prior to the transaction, which accounted for a significant
portion of Yahoo's market cap.
Yahoo shares spiked on the news, but have subsequently come off
of their best levels of the session. At last check, the stock was
trading up 1.60 percent to $15.93. The deal was in the form of $6.3
billion in cash, $800 million in preferred Alibaba shares, and a
one-time cash payment of $550 million in connection with an
amendment to the company's intellectual property license agreement,
according to Reuters.
Alibaba is moving closer to an initial public offering, at which
time it will have the right to buy back the rest of Yahoo's stake.
"The completion of this transaction begins a new chapter in our
relationship with Yahoo," Alibaba CEO Jack Ma said. Yahoo!
initially acquired its ownership stake in Alibaba in 2005 for $1
billion and the sale of its Yahoo China business to the
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.