HONG KONG — Struggling Internet company Yahoo has secured a lifeline after agreeing to sell half of its prized stake in Chinese e-commerce group Alibaba for about $7.1 billion, with most of the cash going to shareholders.
The deal, announced Sunday in the U.S., calls for Alibaba Group to buy back half of the 40 percent stake that Yahoo owns in the Chinese company for $6.3 billion cash and up to $800 million of Alibaba preferred shares. After paying taxes, Yahoo expects to pocket about $4.2 billion.
Chief financial officer Tim Morse told analysts in a Monday conference call that the company still hasn’t determined how it will distribute the Alibaba proceeds after the deal closes within the next six months. For now, the company is stepping up its commitment to buy back its own slumping stock. Yahoo intends to buy up to $5.5 billion of its shares over an unspecified period of time, up from $500 million previously.
The announcement comes after more than two years of talks held under four chief executives as Yahoo tried to sell the Alibaba stake to raise money for its turnaround effort. Money from the sale will give Yahoo the financial firepower to return cash to disgruntled shareholders, many of whom are still upset after it squandered an opportunity to sell itself to Microsoft in May 2008 for $33 per share, or $47.5 billion. Yahoo’s stock hasn’t traded above $20 since September 2008.
The Alibaba agreement gives Yahoo the rare chance to crow about something that went right after years of management missteps and corporate disarray that have depressed its financial results and stock price.
