Yahoo and Alibaba earlier this week have announced they have entered into a definitive agreement for a staged and comprehensive value realization plan for Yahoo’s stake in Alibaba. The company has agreed to a deal to sell a significant part of its 20% stake in Alibaba back to the Chinese ecommerce giant.
The purchase price will be based on a valuation of Alibaba to be established through equity financings that Alibaba intends to undertake to finance the transaction, subject to a floor valuation of approximately US$35 billion. The agreement includes substantial financial incentives for Alibaba to raise the additional equity at a valuation higher than US$35 billion.
At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo would receive from Alibaba consideration of approximately US$7.1 billion, composed of at least US$6.3 billion in cash proceeds and up to US$800 million in newly-issued Alibaba preferred stock.
Here is the official Yahoo filing on Alibaba deal (via AllThingsD):