Yahoo is reportedly almost ready to sell a large share of its stake in the Alibaba Group back to the company. The deal has yet to be officially approved by the boards of either companies, but sources tell AllThingsD that it is likely to be, and could be announced as early as Monday.
It’s “a complex deal that is set to include a multibillion-dollar share buyback to investors of the Silicon Valley Internet giant and an eventual IPO of the Chinese company,” AllThingsD reports, citing source. If all goes according to plan, Yahoo will sell half of its roughly 40% stake in Alibaba, in a taxable deal. The transaction is likely to value that portion of Yahoo’s holdings at about $7 billion -- or 20 percent of Alibaba’s $35 billion enterprise valuation.
“After taxes of upward of 35% are paid on the long-term gains … the company will likely use the funds to buy back its own shares,” AllThingsD predicts. “That stock has been caught in the mid-teens doldrums for quite a while.” Meanwhile, a shareholder dividend is also reportedly being considered.