Alibaba buys back 20% stake held by Yahoo for US$7.1 billion

In a never ending story between the seventeen years old company Yahoo and its Chinese counterpart Alibaba Group, we hear today that jack Ma, the wealthy entrepreneur behind the success of Alibaba, would buy back almost half of the 40 percent stake that Yahoo owns of Alibaba.

A very welcomed cash injection to Yahoo

The deals which is expected to be worth more than 7.1 US$ billion (6.3 US$ Billion in cash and up to 800 US Million in new Alibaba stock) would end the long discussion that have last during the past years on how Alibaba would reclaim some of the 40 percent stakes that Yahoo has bought in 2005.

This deal will allow Yahoo to deliver some values to their shareholders who have asked to receive dividends. Yahoo will also be able to make some acquisitions or buy back its own shares.

Yahoo has been trying during the past years to receive the benefit of its investment in Alibaba but has suffered from troubles linked to the changes in the top management.

Alibaba is heading to a possible IPO

Jack Ma, the current Chief Executive Officer of Alibaba Group, said “This transaction opens a new chapter in our relationship with Yahoo.” He added that the two companies will still working together in the future. One of the possible strategic options may be that Yahoo helps Alibaba to expand beyond China and enters the US market.

Many analysts believe this new deal opens the way to an IPO in the next years, probably in 2015. In this case, Yahoo would still be able to keep a 10% share of Alibaba after a possible future listing.

Started in 1999 as a business to business company linking factories to buyers all over the world, Alibaba is now bigger than Yahoo and has more than 25000 employees working on different websites and online services. Its portfolio includes taobao.com, Tmall, Etao - a shopping search engine -  and Alipay, an online payment system.