14 DAY TRIAL // Yahoo has finally done it. No, it hasn't found a way to pull itself up or finally found a CEO to lead it to a better fortune, but it has gotten rid of its stake in Alibaba. Yahoo has been struggling for years and it has gotten to the point where the company is valued mostly for its Asian investments, in Alibaba in China and Yahoo Japan.
Yahoo has announced that it has come to an agreement to sell half its stake in Alibaba to Alibaba itself for a cool $7.1 billion, €5.55 Billion.
Investors have been looking forward to this for years, but now that it's done, Yahoo's left with a huge chunk of change and the same old problems that have been plaguing it for a decade now.
Mind you, Yahoo only sold half of the 40 percent stake it has in Alibaba, so Yahoo is still left with a lot of interest in the Chinese company.
But Alibaba has been looking for a way to get rid of Yahoo for a very long time, specifically, it has been looking for the cash to do so.
Yahoo has also been looking for a way of making the deal without having to pay any taxes, which are huge, but in the end it agreed to a taxable deal.
Alibaba will be raising funds to buy up to half of Yahoo's stake. If it manages to buy all that, it will pay for most of it in cash and a smaller part, more than 10 percent though, in Alibaba preferred stock.
Also part of the deal is a guarantee that Yahoo will be able to sell its remaining share in the case of an Alibaba IPO, which is very likely, either to Alibaba or on the open market.
Alibaba will be able to use the Yahoo brand, for Yahoo China for another four years, but will be paying royalties for it, $550 million up front.
However, the deal frees up Yahoo to make new investments in China under its own brand. Not that Yahoo is looking to expand at the moment. Yahoo has said that it plans to return most of the money it gets from the deal, after taxes, mostly by buying back shares.