Yahoo Preparing To Divest 15-25% Stake In Alibaba
Yahoo is rumored to be in talks to divest 15-25 percent of its holdings in e-commerce giant Alibaba, a buyback that was suggested and then initiated by the Chinese-owned company.
According to sources close to the deal the move is meant to remove issues that arose when Alibaba founder and CEO Jack Ma attempted to take control of Yahoo. Alibaba is currently 40 percent owned by Yahoo, holdingd that could pocket Yahoo between $4.8 billion to $8 billion.
At one point Yahoo and Alibaba attempted to undertake a $17 billion tax-free asset swap that also included Japan telecom giant Softbank however that deal fell apart when complications arose in the setup of the plan. Softbank owns a 30 percent stake in Alibaba.
If that deal would have been approved it would have saved Yahoo nearly $4 billion in US taxes.
A source close to the most recent deal said the company has experienced a recent hiccup after it was learned that Yahoo CEO Scott Thompson lied on his resume about having received a college degree in computer science. According to a source at Reuters:
“Of all the previous ones we’ve worked on, this one feels like it might actually have a chance of getting done. Or at least it did until a day and a half ago.”
If a deal is eventually approved the amount of that deal will likely be based on how much Alibaba can raise in order to buy back shares. Last September Alibaba was valued at $32 billion.