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Yahoo Boosts its Coffers by $7.1 Billion

Yahoo Boosts its Coffers by $7.1 Billion

Chinese internet giant Alibaba Group has agreed to buy back half of the 40% stake currently owned by Yahoo, in a deal worth around $7.1 billion (£4.5 billion). The move paves the way for Alibaba to consider an initial public offering.

US-based internet company Yahoo confirmed the deal this morning, after falling behind rivals Google and Facebook in online advertising. The deal provides Yahoo with the opportunity to pay dividends, make acquisitions or buy back its own shares. It is a move which many Yahoo stockholders had called for.

In a joint statement, Yahoo and Alibaba representatives confirmed that the Chinese internet group would pay some $6.3 billion in cash and up to $800 million in Alibaba preferred stock.

It is not the first time that Alibaba has attempted to buy back this part of the company, but previous negotiations have experienced problems and multiple setbacks. Now, the Chinese group is expected to facilitate the sale of its own shares on the stock market, and ultimately buy back even more of the remaining 20% Yahoo stake.

The companies will, however, continue to work closely with one another, the statement confirms, with Alibaba keen to benefit from Yahoo’s worldwide reach. This is a key factor in the expansion of Alibaba outside of China.

Despite its limited international reach Alibaba is one of the giants of the internet industry. An Alibaba IPO would be one of the largest technology offerings in the world. The company boasts popular subsidiaries, like the immensely popular consumer to consumer selling platform Taobao. Its 370 million registered users are more than the entire population of the United States.

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