Yahoo plans to sell half of its 40% stake in Alibaba pending approval from the board of directors of both companies. This seems to be the end of an ongoing saga between the two companies. The value of the sale is approximately $7 billion, and Alibaba is raising capital to fund the sale. This sale of Yahoo’s stake puts the total value of Alibaba at $35 billion.
This is also in the midst as Alibaba is looking to commit to an IPO going forward, as Alibaba executives have been publicly indicating this direction. Once the deal with Yahoo is finalized, the progression towards an IPO will significantly move along. Before the IPO, and as a part of the ongoing deal, Yahoo would sell the remaining quarter of its holdings, but still hold a 10 percent stake in the company which could be sold off at any point after the public offering.
Although the deal has not been ratified by each company’s respective boards, once an agreement is made it will have been one of the most profitable investments Yahoo has made in a long time. Now all Yahoo has to focus on is settle the patent infringement lawsuit with Facebook, fix up its advertising business, renegotiate its deal with Microsoft for the search engine, and maybe it has a shot at becoming a strong player again.
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