Cookie consent

We use cookies to improve your experience on this website. By continuing to browse our site you agree to our use of cookies. Tell me more | Cookie preferences

Yahoo, Alibaba reach $7.1 billion deal

Alibaba buys stake back

    Just Watched

    Alibaba buys stake back

Alibaba buys stake back 02:11

Story highlights

  • Yahoo and China's Alibaba Group have agreed to a $7.1 billion share buyback deal
  • The China internet behemoth will buy back half of Yahoo's 40% stake in the company
  • Comes after the departure of Yahoo CEO Scott Thompson in a resume padding scandal
  • The relationship between Alibaba and Yahoo has often been fractious

Yahoo and China's Alibaba Group have agreed to a $7.1 billion deal in which the Hangzhou-based internet behemoth buys back half of Yahoo's 40% stake in the company.

The agreement will give a much-welcomed cash injection to Yahoo, which has lost 65% of its value since its 2006 peak and is smarting from the resume-padding scandal of ex-CEO Scott Thompson, the third chief executive to lead the beleaguered web portal in three years.

Yahoo's 40% stake in Alibaba, purchased in 2005 for $1 billion, is widely considered the company's greatest asset. But the relationship has been a fractious one, punctuated with public disagreements over company direction, as well as Yahoo siding with Google in its 2010 fight with Chinese regulators.

Alibaba CEO Jack Ma publicly said in September he might be interested in buying Yahoo. "This transaction opens a new chapter in our relationship with Yahoo," Ma said in a news release Monday.

Alibaba is a leading e-commerce provider in China, the world's largest internet market.

Why can't Yahoo keep a CEO?

    Just Watched

    Why can't Yahoo keep a CEO?

Why can't Yahoo keep a CEO? 03:07
MYB: Yahoo CEO resigns

    Just Watched

    MYB: Yahoo CEO resigns

MYB: Yahoo CEO resigns 02:58

"Today's agreement provides clarity for our shareholders on a substantial component of Yahoo!'s value and reaffirms the significance of our relationship with Alibaba," said Ross Levinsohn, interim CEO of Yahoo, in a release on the deal.

Under the terms of the deal, Yahoo will get $6.3 billion in cash and up to $800 million in newly issued Alibaba preferred stock.

"We look forward to delivering the proceeds of the near-term transaction to our shareholders, and to the further enhancement of value and the additional monetization in the future that this agreement enables," said Timothy R. Morse, chief financial officer of Yahoo.

      CNN recommends

    • pkg clancy north korea nuclear dreams_00002004.jpg

      As "We are the World" plays, a video shows what looks like a nuclear attack on the U.S. Jim Clancy reports on a bizarre video from North Korea.
    • Photojournalist Alison Wright travelled the world to capture its many faces in her latest book, "Face to Face: Portraits of the Human Spirit."
    • pkg rivers uk football match fixing_00005026.jpg

      Europol claims 380 soccer matches, including top level ones, were fixed - as the scandal widens, CNN's Dan Rivers looks at how it's done.
    • No Eiffel Towers, Statues of Liberties, Mt. Rushmores, Taj Mahals, Aussie koalas or Chairman Maos.

      It's an essential part of any trip, an activity we all take part in. Yet almost none of us are any good at it. Souvenir buying is too often an obligatory slog.