Yahoo and Alibaba Make Stock Deal Official

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Remember the $7 billion deal we were talking about on Friday with Yahoo and Chinese-based Alibaba? Well, they are making it official. Yahoo has agreed to sell off its shares of the Alibaba empire. A majority will be purchased back by the company and the remained will be sold after the Alibaba IPO, whenever that is.

The deal was announced formally yesterday in a joint press release. Yahoo currently holds a 40% stake in the Chinese company. 20% will be bought back by Alibaba during the rest of 2012, the other 20% will be sold off at the time of Alibaba's IPO. The negotiation brings a conclusion to a long dispute between the two parties about what should be done with Yahoo's controlling shares of Alibaba.

Ross Levinsohn, Interim CEO of Yahoo comments on the deal being made official:

“Today’s agreement provides clarity for our shareholders on a substantial component of Yahoo!’s value and reaffirms the significance of our relationship with Alibaba,”

“We look forward to continued collaboration with the Alibaba team on business initiatives as we explore joint opportunities for growth and benefit from Alibaba’s future. I want to thank Jack Ma, Joe Tsai and the Alibaba team, as well as Tim Morse, Michael Callahan and our Yahoo! team for their dedication in achieving this successful outcome.”

Jack Ma, Chairman and Chief Executive Officer of Alibaba Group also comments on the deal:

“This transaction opens a new chapter in our relationship with Yahoo!,”

“I look forward to working with Ross Levinsohn and the Yahoo! team as Alibaba builds China’s leading e-commerce company. Yahoo!’s global audience reach will provide attractive partnership opportunities for Alibaba to explore markets outside of China. The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future.”

The deal represents a significant value to Yahoo shareholders. If you remember, Yahoo recently experienced an overhaul in leadership after a bloody proxy battle with investment firm Third Point and activist shareholder Dan Loeb. Yahoo is expected to be making some drastic changes as a result of the battle in the coming months.

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