Yahoo Forecast To Gain $15B From Alibaba IPO

Yahoo shares were up more than 3% in early trading Monday after China-based e-commerce giant Alibaba confirmed plans for an IPO in the U.S.

As one of the company’s largest shareholders, Yahoo has a 24% stake in Alibaba, sometimes described as China's Amazon or eBay. On Sunday, the company said in a statement it would begin the process of launching an IPO on a U.S. stock exchange later this year. Analysts project the offering could raise about $15 billion and value the company at $100 billion or more.

Alibaba has not set a date for the IPO filing or indicated whether it will list on the New York Stock Exchange or the Nasdaq Stock Market. In either case, Yahoo stands to earn a windfall from the offering expected to take place by summer or early fall.

Yahoo’s stake in Alibaba, and its 35% ownership of Yahoo Japan, have already played a big part in boosting the company’s bottom line and valuation despite the challenges to its core business. It has also given CEO Marissa Mayer a cushion while she tries to pull off a turnaround at Yahoo.

The Web giant will be among the sellers in the offering, according to a Re/code report, citing sources close to the company. Due to a prior agreement, Yahoo will have to sell just over half its shares. With Yahoo already pursuing an aggressive acquisition strategy, albeit one focused mainly on small startups, its war chest will be that much bigger after the Alibaba IPO.

That, in turn, could lead to Yahoo eyeing more acquisitions on the scale of its $1.1 billion purchase of Tumblr, or larger. Mayer reiterated on the company’s fourth-quarter conference call that Yahoo this year will continue to look “opportunistically” for talent acquisitions, as well as strategic deals that align with its four main areas of search, communications, digital magazines and video, as well as Flickr and Tumblr.

In that vein, Re/code’s Kara Swisher reported that Yahoo is preparing to launched an updated version of its Flickr app to better compete with Facebook-owned Instagram. A redesign of the iOS version of the app under Mayer was launched in December 2012, with a separate upgrade of the Flickr Web site and Android app unveiled in May 2013. 

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