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What did Yahoo sell to Alibaba?
Alibaba bought 523 million of its ordinary shares from Yahoo at $13.54 per share, for approximately $7.1 billion in share consideration. Yahoo’s SEC filing describes that consideration as about $6.3 billion in cash and $800 million in Alibaba preference shares. Yahoo’s September 2012 Form 8-K reports the closing terms.
The transaction represented approximately half of the 1.047 billion Alibaba shares Yahoo held at the time, according to Yahoo’s quarterly filing. Yahoo’s 2012 Form 10-Q describes the shareholding and related agreement changes.
Why was the deal described as $7.6 billion?
The approximately $7.6 billion headline combined two different payments. The $7.1 billion was consideration for the shares. Alibaba separately paid Yahoo $550 million in connection with an amendment to their technology and intellectual-property license. Yahoo said the payment satisfied certain future royalty payments under that license. The closing filing and Yahoo’s SEC-filed announcement distinguish the components.
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Yahoo’s announcement also reported approximately $4.3 billion in net cash proceeds after taxes and fees. That is a net amount, not the value of the shares sold or the total transaction headline.
When did the repurchase close?
The first stage closed on September 18, 2012. Yahoo and Alibaba had announced a staged plan on May 20, 2012. The initial stage provided for Alibaba to repurchase up to 523 million shares; a later stage allowed Yahoo to sell up to 261.5 million more shares in connection with a qualifying Alibaba IPO, subject to the agreement’s terms. Yahoo’s closing Form 8-K describes the initial stage, while the May 2012 Form 8-K sets out the original plan.
So the September closing completed the initial repurchase, not every step contemplated in May.
What else changed in the companies’ relationship?
The closing was broader than a transfer of shares. Yahoo and Alibaba amended and restated agreements governing their relationship, including the technology and intellectual-property license. Yahoo’s quarterly filing also reports changes to other contractual provisions, including the termination of certain existing limitations on Yahoo’s ability to compete in mainland China. Yahoo’s 2012 Form 10-Q describes those provisions.
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How to read the deal’s headline figures
| Figure | What it represents |
|---|---|
| Approximately $7.1 billion | Consideration for the 523 million shares: approximately $6.3 billion in cash and $800 million in preference shares, at $13.54 per share. Yahoo’s Form 8-K. |
| $550 million | A separate payment connected to the amended technology and intellectual-property license, not share-sale proceeds. Yahoo’s SEC-filed announcement. |
| Approximately $7.6 billion | The approximate first-stage transaction headline, reflecting the share repurchase and the separate license-related payment. Yahoo’s SEC-filed announcement. |
| Approximately $4.3 billion | Yahoo’s reported net cash proceeds after taxes and fees; not gross consideration. Yahoo’s SEC-filed announcement. |
These are historical figures disclosed for the 2012 transaction, not current valuations of Yahoo, Alibaba, or their shares.
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