Yahoo sold its stake in Alibaba for $7.6 billion, but will funnel most of the after-tax proceeds back to shareholders.
The search company’s after-tax take will be around $4.3 billion, $3.65 billion of which will be returned to Yahoo’s investors. However, it’s unclear whether the company will return the money in the form of buybacks or dividends. A buyback, in which Yahoo offers investors the option of selling back a portion of their shares at a premium, would boost Yahoo’s stock price.
Yahoo had previously owned a 40% stake in Alibaba, the Chinese e-commerce giant. Under the terms of the deal, Alibaba paid Yahoo about $6.3 billion in cash plus $800 million in preferred shares in the company. In addition, there was a one-time $550 million cash payment related to the two companies’ intellectual property license agreement. Yahoo bought its stake in Alibaba in 2005 for $1 billion.
Alibaba said it paid Yahoo about $6.3 billion in cash and $800 million in preferred shares in Alibaba Group. It also made a one-time cash payment of $550 million in connection with an amendment to the two companies’ intellectual property license agreement.
Though there was speculation that new CEO Marissa Mayer would use the influx of cash to buy attractive startups, it appears there will be little left for such activity.