Seven years ago, Yahoo chose to invest $1 billion in China’s Alibaba Group. Over the years, the company has since ran into trouble and has been considering a pull-out of its stake from Alibaba. Now, the two companies have finally sealed a deal which brings Yahoo a considerable fortune on its initial investment.
Yahoo had nearly 40% stake in Alibaba, a number which has now been diminished to 20% since according to the present deal, Alibaba is paying off Yahoo for half of its stake, for now.
At the end of the day, Yahoo will be able to bag $4.3 billion out of this deal, which is a very handsome return on the initial $1 billion investment. There had been speculations that Yahoo’s new CEO, Marissa Mayer, may decide to invest this sum elsewhere or spend it on a few important acquisitions.
But Yahoo has refuted all such speculations by stating that it would be handing back $3.65 billion of this payback to the shareholders, which should be good news for Yahoo’s investors. It may be Yahoo’s attempt to regain a goodwill with its investors who seem quite unhappy with the company since the past recent months.
According to the CEO of Alibaba Group, “The completion of this transaction begins a new chapter in our relationship with Yahoo! We are grateful for Yahoo!’s support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo! I look forward to working with Marissa Mayer and her team in our continued partnership.”