Yahoo! recently sold its shares in the Chinese enterprise, Alibaba, for $7.6 billion. After taxes, the take- home funds will be around $4.3 billion. Great news for investors in Yahoo!: the after tax monies, around $3.65 billion, will be funneled back to the company?s shareholders.
The deal
- Yahoo!’s investments in Alibaba totaled a 40% stake in the company
- Alibaba paid Yahoo! approximately $6.3 billion in cash + $800 million in preferred shares
- A one time $550 million cash payment was related to both companies’ intellectual property agreement
Predictions
Yahoo! purchased the shares in Alibaba back in 2005 for $1 billion. It is still unclear how Yahoo! intends to return the profited funds, but rumors include possible buybacks or dividends. A buyback would allow investors the option of selling back part of their shares at a premium. This option would also benefit Yahoo! by boosting its stock price. Another prediction proposes that Marissa Mayer, Yahoo!’s new CEO, may use the cash to purchase promising startups.
