Alibaba and Yahoo Begin Untangling

Moneybox
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

Culturebox

The Ebola Story

How our minds build narratives out of disaster.

The Budget Disaster That Completely Sabotaged the WHO’s Response to Ebola

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

The Shooting Tragedies That Forged Canada’s Gun Politics

A Highly Unscientific Ranking of Crazy-Old German Beers

Education

Welcome to 13th Grade!

Some high schools are offering a fifth year. That’s a great idea.

Culturebox

The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

Want Kids to Delay Sex? Let Planned Parenthood Teach Them Sex Ed.

Would You Trust Walmart to Provide Your Health Care? (You Should.)

  News & Politics
Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
  Business
Continuously Operating
Oct. 22 2014 2:38 PM Crack Open an Old One A highly unscientific evaluation of Germany’s oldest breweries.
  Life
Dear Prudence
Oct. 23 2014 6:00 AM Monster Kids from poorer neighborhoods keep coming to trick-or-treat in mine. Do I have to give them candy?
  Double X
The XX Factor
Oct. 22 2014 4:27 PM Three Ways Your Text Messages Change After You Get Married
  Slate Plus
Tv Club
Oct. 22 2014 5:27 PM The Slate Walking Dead Podcast A spoiler-filled discussion of Episodes 1 and 2.
  Arts
Culturebox
Oct. 22 2014 11:54 PM The Actual World “Mount Thoreau” and the naming of things in the wilderness.
  Technology
Future Tense
Oct. 22 2014 5:33 PM One More Reason Not to Use PowerPoint: It’s The Gateway for a Serious Windows Vulnerability
  Health & Science
Wild Things
Oct. 22 2014 2:42 PM Orcas, Via Drone, for the First Time Ever
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.