Alibaba and Yahoo Begin Untangling

A blog about business and economics.
Sept. 18 2012 4:36 PM

Alibaba and Yahoo Begin Untangling

Yahoo announced on Tuesday that it's sold half of its 40 percent stake in Alibaba for a mixed bag of cash and preferred shares that will net it $4.3 billion after taxes and fees.

Aquiring 40 percent of Alibaba, a leading Chinese Internet company, back in 2005 is one of the smartest business moves Yahoo's made over the years. But as time passed it became increasingly clear that there were few if any meaningful business benefits to the cross ownership. There was just Yahoo the operating entity, and then Yahoo the holding company that owned a valuable stake in Alibaba. A key part of the current Yahoo leadership's plan for turning the company around is to unwind the Alibaba relationship and put that value to use. In particular, 85 percent of the money is going to be kicked out to Yahoo shareholders while the remaining 15 percent can be reinvested in Yahoo's core businesses. As a bonus the transaction should end up netting a pretty large amount of tax revenue for the U.S. government, since unrealized appreciation of a large ownership stake in a Chinese company isn't taxable, but these dividends will be.

Advertisement

Half of Yahoo's remaining stake will be liquidated when Alibaba does its IPO, and the rest will be sold off later after the decent interval provided by the post-IPO lockup period.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

The Extraordinary Amicus Brief That Attempts to Explain the Wu-Tang Clan to the Supreme Court Justices

Amazon Is Officially a Gadget Company. Here Are Its Six New Devices.

The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Altered State

The Plight of the Pre-Legalization Marijuana Offender

What should happen to weed users and dealers busted before the stuff was legal?

Surprise! The Women Hired to Fix the NFL Think the NFL Is Just Great.

You Shouldn’t Spank Anyone but Your Consensual Sex Partner

Moneybox
Sept. 17 2014 5:10 PM The Most Awkward Scenario in Which a Man Can Hold a Door for a Woman
  News & Politics
Altered State
Sept. 17 2014 11:51 PM The Plight of the Pre-Legalization Marijuana Offender What should happen to weed users and dealers busted before the stuff was legal?
  Business
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
  Life
Dear Prudence
Sept. 18 2014 6:00 AM All Shook Up My 11-year-old has been exploring herself with my “back massager.” Should I stop her?
  Double X
The XX Factor
Sept. 17 2014 6:14 PM Today in Gender Gaps: Biking
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Brow Beat
Sept. 17 2014 8:25 PM A New Song and Music Video From Angel Olsen, Indie’s Next Big Thing
  Technology
Future Tense
Sept. 17 2014 9:00 PM Amazon Is Now a Gadget Company
  Health & Science
Medical Examiner
Sept. 17 2014 11:48 PM Spanking Is Great for Sex Which is why it’s grotesque for parenting.
  Sports
Sports Nut
Sept. 17 2014 3:51 PM NFL Jerk Watch: Roger Goodell How much should you loathe the pro football commissioner?