Yahoo And Alibaba Are Negotiating On Equity Transaction

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On May 18, Yahoo was again said to be negotiating with Alibaba on the issue of selling equity. It is possible to have the result early next week at most.

According to the report of the All Things Digital in the evening of the 17th, Yahoo plans to sell 20% of Alibaba Group equities to the latter with $ 7 billion, which will allow Yahoo’s equity of Alibaba to reduce by half. Bloomberg News quoted the words of sources to confirm the negotiations on 18.

The trading price means that the evaluation of Alibaba Group is about $ 35 billion, and Yahoo holds 40 percent equity of the company. The negotiation hasn’t had the final result so far and the spokesman of both sides would not make any comment. But Yahoo on 18 held the board meeting and would discuss and approve this transaction. The board of directors of Alibaba is expected to make a decision in a few days.

All Things Digital said Yahoo’s profits in this transaction may be used to buy back Yahoo’s own stocks and dividends also may be used. It is unclear that whether some of the cash will be retained by the company for future acquisitions.

The ...
... media also quoted the words of sources and said, one of the driving force of this transaction is Alibaba may be listed in the future, but this is not stipulated in the contract content, and there is no timetable.

Yahoo on the 13th of this month appointed a new chairman Fred Amoroso and transitional Chief Executive Officer Ross Levinsohn. Scott Thompson, the former CEO involved in the negotiation, has resigned due to academic fraud.

Driven by the news, Yahoo’s share price rose 3.7% on 18. Since the company rejected Microsoft’s takeover offer of $ 33 per share in 2008, the stock price of it has been in the doldrums, and once fell to $ 8.90.

Previously, it is reported that the way of Yahoo to sell Alibaba equity is the “cash-stripping”. The purpose is to help Yahoo avoid tax, but this would involve the third party and the form is complex. And later, the negotiation ended in failure. The current direct way of transaction being negotiated will make Yahoo face tax challenge.

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