Alibaba buys back part of stake held by Yahoo
Staff Reporter 2012-09-19 12:00
Alibaba chairman Jack Ma discusses the group's reform plans at the 9th AliFest in Hangzhou on Sept. 9. (Photo/Xinhua)
Alibaba Group announced on Tuesday it has bought back a stake in the company owned by Yahoo for about US$7.6 billion, bringing the company closer to an initial public offering, reports Shanghai's First Financial Daily.
The Chinese internet services provider, based in Hangzhou, said it paid Yahoo about US$6.3 billion in cash and US$800 million in preferred shares in Alibaba Group for 50% of the stake held by Yahoo. It also made a one-time cash payment of US$550 million for Yahoo's technology and intellectual property.
The Chinese group will have the right of preemption with the remaining stake from Yahoo at the time of its IPO.
Yahoo owned about 40% of Alibaba Group before Tuesday's transaction. After the transaction, the US internet company continues to hold about 23% of Alibaba's common share. Together with the preferred stock, it stakes is valued at about US$8.9 billion, the company told Reuters.
According to the deal, Yahoo will give up the appointment right of the second board member, as well as the veto power over Alibaba's strategies and management policies. The board of Alibaba will maintain a ratio of 2:1:1 respectively controlled by Alibaba, Yahoo and Japanese telecom and internet company SoftBank.
"The completion of the transaction will contribute to the integrity of our stake structure," Alibaba chairman Jack Ma was quoted by the First Financial Daily as saying.
On May 20, Alibaba reached an agreement with Yahoo to buy back its shares. Yahoo acquired its 40% stake in Alibaba Group in 2005 in exchange for US$1 billion and the sale of its Yahoo China business to Alibaba.
For this transaction, Alibaba received US$1 billion from China Development Bank, which is the only bank from China, as well as another US$1 billion loan from eight foreign banks including Barclays, Citibank, Credit Suisse, Deutsche Bank and Morgan Stanley.
It raised funds through the issue of convertible preferred shares and ordinary shares to investors such as DST Global, Silver Lake, Temasek Holdings, Boyu Capital and CITIC Capital.
