• by Mark Walsh  @markfwal, September 18, 2012

Yahoo on Tuesday announced closing the sale of half its 40% stake in China-based Alibaba Group, generating proceeds of about $7.6 billion--$6.3 billion in cash and $800 million in preferred shares. Yahoo also received a payment of $550 million for a technology and intellectual property license agreement with Alibaba.

The companies reached an agreement in principle on the deal in May. "The completion of the first stage of the Alibaba share repurchase represents a significant milestone for both Alibaba and Yahoo,” said Yahoo! CEO Marissa Mayer, in a statement.

“The execution of the deal was excellent, and we are excited to announce its completion well within the six-month time frame we communicated. I look forward to continued partnership with Jack Ma and his team as they position Alibaba for future growth.”

She added that Yahoo would return $3 billion of the proceeds to shareholders in addition to the “down payment” of $646 million made the past few months.

Yahoo still owns about 23% of Alibaba common stock. Under the terms of its deal with Alibaba, the second phase allows for Yahoo! to monetize approximately half of its remaining stake at the time of an initial public offering (IPO) of Alibaba. After an IPO, Yahoo has the right to sell its remaining shares following a customary lock-up period.

Alibaba currently has a valuation of about $40 billion, according to an AP report.