Alibaba to buy back shares from Yahoo

Alibaba, China's top e-commerce player, will re-purchase a 20-per cent state in itself from US portal Yahoo! for at least $7.1 billion, the companies announced on Sunday. "At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo! would receive from Alibaba consideration of approximately $7.1 billion, composed of at least $6.3 billion in cash proceeds and up to $800 million in newly-issued Alibaba preferred stock," the firms said in a statement. "Today's agreement provides clarity for our shareholders on a substantial component of Yahoo!'s value and reaffirms the significance of our relationship with Alibaba," said Ross Levinsohn, Interim CEO of Yahoo!. "We look forward to continued collaboration with the Alibaba team on business initiatives as we explore joint opportunities for growth and benefit from Alibaba's future. Alibaba's leadership was also upbeat about doors the relationship could open. "This transaction opens a new chapter in our relationship with Yahoo!," said Jack Ma, Chairman and Chief Executive Officer of Alibaba Group. "I look forward to working with Ross Levinsohn and the Yahoo! team as Alibaba builds China's leading e-commerce company. Yahoo!'s global audience reach will provide attractive partnership opportunities for Alibaba." Yahoo! stock price had climbed Friday on rumors that it was close to a multibillion-dollar deal to sell half of its stake in Alibaba.com back to the Chinese online shopping portal. Yahoo! shares were up nearly four per cent to $15.42 on the Nasdaq exchange by the close of trading due to unconfirmed reports that the only hurdle remaining was for the boards of the companies to sign off on the deal. Alibaba had long expressed a desire to buy back the 43 per cent chunk of the company owned by Yahoo!, but repeated attempts at working out terms failed. Cashing out the Yahoo! share of Alibaba had been part of a turnaround plan by freshly ousted Yahoo! chief executive Scott Thompson. Thompson was forced out this month in the face of controversy about an inflated resume, resulting in a truce in a proxy war with mutinous shareholder Daniel Loeb. As part of the settlement with Loeb's hedge fund Third Point, Ross Levinsohn became interim Yahoo! chief and Fred Amoroso took charge of the board of directors the Sunnyvale, California-based firm.