Yahoo! is in talks to sell about 20 percent of Alibaba Group Holding. For about $7 billion, a deal that would cut by half its stake in China’s largest e-commerce provider, according to a person with knowledge of the matter.
Alibaba, which has been trying to buy back the stake in itself for more than a year, may announce a deal as soon as next week, said the person, who asked not to be identified because the matter is private. Yahoo! has come close to selling the stake in the past and failed, and it may not reach an agreement this time either, the person said.
Alibaba would gain more control over its future, including a possible initial public offering, by owning more of itself. It stepped up efforts to repurchase stock held by Yahoo! in September, when the US company fired former chief executive officer Carol Bartz. Reducing the Alibaba stake lessens Yahoo!’s toehold in the world’s largest Internet market, while also making a takeover of the US company more likely, said Jordan Rohan, an analyst at Stifel Nicolaus & Co.
“For Yahoo! shareholders, the sale and subsequent march towards an IPO is a clear positive, as many questioned whether Yahoo! would be able to monetize its China assets at all,” Rohan said.
AllThingsD said the deal is likely to value the portion of Yahoo!’s holdings at about $7 billion, or 20 percent of Alibaba’s $35 billion enterprise valuation. After a potential IPO, Yahoo! could sell more of its stake, AllThingsD reported.
Yahoo! and Alibaba declined to comment.
Yahoo! shares rose 3.7 percent to close at $15.42. The shares had fallen 7.8 percent this year before yesterday.
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