Yahoo Finally Closes $7.6B Deal With Alibaba – ValueWalk Premium

Yahoo Finally Closes $7.6B Deal With Alibaba

With reports from last week indicating that the multi-billion dollar Yahoo! Inc. (NASDAQ:YHOO), Alibaba deal will come to an end this week, both parties have kept their word and officially closed the deal today. Limited (HKG:1688) managed to successfully repurchase half of Yahoo’s stock at $7.6 billion, restructuring the relationship between the two companies.

Yahoo Finally Closes $7.6B Deal With Alibaba

While Yahoo! Inc. (NASDAQ:YHOO) still has half of its initial 40 percent stake at Limited (HKG:1688), it has managed to gain immensely from the transaction. From the $7.6 billion, Yahoo will net a reasonable figure of around $4.5 billion after tax deductions. This is an exceptional return on the $1 billion that the company co-founder and former CEO, Jerry Yang, invested in the company some 7 years ago.

For a long time, the plan was to return a substantial amount of the cash gleaned from the Alibaba deal to shareholders. This however changed after CEO Marissa Mayer made it clear that she had other plans for the money. While her plans are still not decisive, speculation points towards acquisitions. This of course follows a lot of pressure from entrepreneurs, bankers and investors, among other interested stakeholders.

All said Yahoo! Inc. (NASDAQ:YHOO) is making some major steps to reclaim its long lost glory. This sell underscores its doubled efforts and suggests that its hopes of competing with avid competitors like Google Inc (NASDAQ:GOOG) could be well in sight.

Everybody wins

On the other hand of the table, Limited (HKG:1688) has also managed to record some major milestones for itself. Being the largest e-commerce company in China, it has not only exclaimed its size but it has also secured a competitive advantage over its competitors. Its stock is now highly attractive especially after considering that in addition to this acquisition, the company has been able to complete more than $12 billion in transactions over the past 12 months.

Alibaba Vice President John W. Spelich shared insight on the company’s $12 billion in transactions citing that the company currently holds a valuation of $40 billion. Spelich also highlighted Alibaba’s strategic flexibility bringing to light the $3 billion in cash that the company still has at the wake of the $12 billion transactions.

Alibaba also seemed delighted about its relationship with Yahoo! Inc. (NASDAQ:YHOO). Jack Ma, the Chairman and CEO of the Alibaba group noted that the company was grateful for Yahoo’s contribution over the last seven years. “I look forward to working with Marissa Mayer and her team in our continued partnership,” he noted.


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