Yahoo Will Return $3B to Shareholders After Alibaba Deal

by Christopher Freeburn | September 19, 2012 2:19 pm

Yahoo (NASDAQ:YHOO[1]) announced that it has completed the sale of half of its stake in Alibaba and plans to return most of the cash proceeds of the sale to shareholders[2].

Under the terms the previously announced deal, Alibaba, a Chinese ecommerce website, paid $7.6 billion to buy back the Yahoo’s stake in the company, the New York Times noted.

Yahoo officials said the company would return $3 billion, roughly 85% of the cash proceeds from the Alibaba deal, to shareholders, but did not say how the company planned to do that.

Since May, Yahoo has repurchased shares totaling $646 million.

The two companies have had a relationship since 2005, when Yahoo purchased a 40% stake in the company. As Yahoo’s fortunes have declined, the relationship between the companies deteriorated.

The deal to sell half of Yahoo’s stake in Alibaba was announced back in May[3]. Analysts noted that while the deal provides Yahoo with a needed cash infusion, it does little to put the struggling Internet pioneer back on a path to web prominence.

Yahoo’s remaining stake in Alibaba is currently valued at $8.1 billion. Yahoo will sell more of its stake when the company goes public as part of the deal.

Shares of Yahoo were mostly flat in Wednesday afternoon trading.

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