News this week: China’s largest B2B e-commerce company, the
Alibaba Group, and its key shareholder,
U.S.-based Yahoo! Inc.
have reached an agreement for Alibaba to initially buy back up to half of
Yahoo’s 40% stake in the company for approximately US$7.1 billion.
The agreed consideration
will consist of least US$6.3 billion in cash and up to US$800 million in
newly-issued Alibaba preferred stock. The deal values Alibaba Group stock at approximately US$13.50 per
share which is roughly in-line with
the reported price paid by a group of private equity firms in 2011. The deal values the Alibaba
Group at a minimum of US$35 billion.
As part of the agreement,
the companies have also agreed on a framework for Yahoo to sell its remaining
stake back to the Alibaba Group in phases. If there were to be an initial
public offering (IPO) of Alibaba Group shares, Alibaba would be required either
to repurchase 25% of Yahoo’s remaining stake at the IPO price or to allow Yahoo
to sell those shares during the IPO.
Alibaba stated, however, that the company is not currently planning for
an IPO, nor is there a timetable for a future IPO.
Alibaba Group Chairman and CEO, Jack Ma, was quoted saying, “This
transaction opens a new chapter in our relationship with Yahoo. The transaction
will establish a balanced ownership structure that enables Alibaba to take our
business to the next level as a public company in the future.”
According to various media reports, Alibaba is looking to borrow up to
US$4 billion, US$2 billion from the China Development Bank and another US$2
billion from a syndicate of international lenders to fund the US$7.1 billion
buy back from Yahoo.
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