As part of today’s earnings release, Yahoo revealed that Alibaba is allowing it to keep a greater portion of its stake when it issues its initial public offering. Yahoo will be required to sell 140 million shares in the Chinese e-commerce company, compared to the 208 million the two companies agreed to last October.
That previous deal was already a huge win for Yahoo, as it brought the number of shares it had to sell down by approximately 20 percent from 261.5 million. As Re/code’s Kara Swisher pointed out back in May, the October agreement left the door open for an amended amount, should Alibaba feel generous:
Still, if it does not offer up Yahoo shares for sale, Alibaba will probably have to gin up more from its own kitty. So — since the initial IPO filing gave no indication — we’ll see how generous it wants to be. If it were to allow Yahoo to keep more shares at all, sources said it will still be a very small amount.
Yahoo owns 523.6 million shares of Alibaba that should hold a value in the tens of billions of dollars after the company’s IPO. Many have speculated about what Yahoo will do with the capital it would have to work with once it sold those shares, including major acquisitions. By keeping more shares, Yahoo gets less money in the short-term but potentially greater returns from post-IPO growth in Alibaba’s stock. It also gets to maintain a tighter relationship with Alibaba, one it has been cultivating since Yahoo exec Jacqueline Reses joined Alibaba’s board in late 2012.
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