Yahoo selling Alibaba shares for $7.1 billion

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SHANGHAI / NEW YORK (Reuters) - Jack Ma return up to half of a 40-percent stake in its Alibaba group of Yahoo Inc. for $7.1 billion, in the Chinese Internet entrepreneur buys a business that the Chinese e-commerce head closer moves to a public listing.

According to the agreement Yahoo will sell half of its stake preference shares to Alibaba for at least $6.3 billion in bar and up to $800 million in new Alibaba. The offer, in a joint statement on Monday, caps won it back years often bitter negotiations on such as Alibaba, some or all bought announced the 40-percent stake, the Yahoo for approximately $1 billion in 2005.

While Alibaba founder a strong personal relationship with Yahoo had MA co-founder Jerry Yang, led the initial investment in Alibaba, sour ties between the two companies as Yang ousted and replaced by Carol Bartz as CEO was.

Relations were unity Alipay and Yahoo's attempt by a spat over the Chinese Group's payment, more directors by Alibaba appoint more difficult. Negotiations on a complex offer for Ma, who close to 7.5 percent of Alibaba, buy back most of the Yahoo shares for up to $9 billion this year on evaluation of rock.

Yahoo, which has come under fire from shareholders not aggressive take, reversing a decline in advertising revenue in the face of competition from Google Inc. and Facebook, will hand most the sale proceeds, after taxes, to its shareholders.

"It is a good compromise for Yahoo, they would never all the 40 percent of the shares hold and expect that these guys IPO." "I think that she sold it to a pretty reasonable assessment," said Michael Clendenin at RedTech consultant in Shanghai. "Yahoo has much bigger problems, I mean they are the way of the Dodo bird of a portal, so they go."

"Credit Jack Ma, he is a Wheeler and dealer and he got a very good deal on this one," he added.

A source familiar with the matter said that Yahoo built operates incentives for Alibaba, the popular Chinese online marketplace Taobao, initially to hold public offering until the end of 2015. Alibaba would buy back half of Yahoo's remaining shares - a 10-percent holding - at the cost of the IPO or Yahoo to allow these shares in the offer until the end of 2015.

Alibaba group, estimated at 30-35 billion dollars, his unit listed in 2007 and decided in February to buy it Alibaba.com, MA to say that a group of IPO would reward employees for their services.

"The assessment is reasonable... but I do not think that this will affect the IPO strategy," said Elinor Leung, analyst at the CLSA. "I don't think that the IPO is imminent, i.e. in this year." "NET-NET goes for Yahoo positively, because you pay half of the shares, but Yahoo's main concern is his business in the United States."

Alibaba, said that it the money through a combination of bar, fremd-and equity would increase. Sources said that the Group was in talks with existing shareholders including Singapore State investor Temasek Holdings, approximately $2.3 billion to increase equity part-financing the deal. Alibaba was not immediately available to comment, and a Temasek spokesperson declined comment.

Temasek bought shares of Alibaba staff in September in a public offer to the DST global and Silver Lake Yunfeng capital also took part. According to basis point, a publication of Thomson Reuters is Alibaba a loan of $3 billion for taking their private listed unit at a $4 billion increase.

Alibaba has long been the dominant player in China's booming e-commerce sector, but the landscape in the world's largest Internet market develops with Amazon.com, arise as hard Dangdang and 360buy. Taobao has around 90% market share in China consumer-to-consumer online trade and more than 53 per cent of the business-to-consumer market.

SIMPLIFICATION YAHOO

Yahoo's Alibaba goes and its 35-percent stake in Yahoo Japan, he owns together with SOFTBANK Corp., are considered the Crown jewels of the struggling US Internet company. Some investors have said that Yahoo should some of these farms and the proceeds to shareholders make money back. SOFTBANK owns about 30 percent of Alibaba.

Analysts said raise cash for Yahoo and simplify the structure would down sell the Asian assets investors appreciate the main US operations easier. Yahoo said that he would return, "essential of all" after-tax money proceeds from the business to its shareholders, a planned stock share buy-back authorization of $5 billion increase.

The deal is a major achievement and an early sign of progress for Yahoo interim CEO Ross Levinsohn, the fifth person step into the top job in the last five years at the company, the sales, layoffs, management reorganizations and current departures have seen.

Many analysts expect Levinsohn - who follows Scott Thompson, who early this month, after he was accused who exaggerated his qualifications, and Bartz, last September - was dismissed as the company to its media properties including Yahoo Sports and Yahoo Finance, during the focus of less on expensive tech efforts like search and social networking re.

A deal with Alibaba finalizing a distraction could focus allows Levinson on a comeback plan, while potentially goodwill of investors frustrated by mistakes and poor performance deserve to be removed.

"For Yahoo, this is something that done Alibaba get there a bit a problem with the group is therefore mostly owned by foreign companies, had..." Nomura Securities analyst Jin Yoon said told of Reuters.

"China of asset was its crown jewel, so I don't actually expect Yahoo that, to fully depart from China and I expect Yahoo to have a type of remaining participation with Alibaba group."

Sunnyvale, California-based Yahoo and Japan SOFTBANK agreed, its shareholders voting rights in Alibaba at under 50 percent, Cap, said a source familiar to keep foreign ownership effective in check with the theme.

In addition to the share buyback is Yahoo and Alibaba of their existing technology and intellectual property continue to license agreement with Alibaba, Yahoo China under the brand name of Yahoo for up to four years change. Yahoo will be exempted from restrictions on other investments in China. Alibaba will make an advance royalty free, flat rate of $ 550 million on Yahoo and payment of royalties for up to four years.

UBS was lead financial advisor to Yahoo, while Credit Suisse Alibaba advise.

(Additional reporting by Jonathan Gordon, Denny Thomas and Chyen Yee Lee in Hong Kong, Alexei Oreskovic in San Francisco and Saeed Azhar in Singapore;) Letter from Ian Geoghegan; (Editing by Muralikumar Anantharaman)

(C) Copyright Thomson Reuters 2012.