Yahoo seals Alibaba deal

Troubled US internet search firm Yahoo today agreed to sell half of its 40% stake in China’s Alibaba Group for $7.1 billion (£4.5 billion) in a bid to appease angry shareholders.

Yahoo, whose chief executive Scott Thompson quit earlier this month over allegations that he faked information on his CV, is selling the stake to Alibaba founder Jack Ma.

The two sides have been holding on-off talks for months over the sale, and a previous deal, valued at up to $9 billion, faltered over the price.

Ma originally sold the 40% stake to Yahoo for $1 billion in 2005, but relations soured — not least because Yahoo has lacked direction, with a series of different bosses taking the helm.

Thompson only joined in January, after previous chief executive Carol Bartz was ousted barely two years into the job.

Yahoo will receive at least $6.3 billion in cash from Ma as part of the sale, and the US internet firm plans to return most of the proceeds to shareholders.

Investors have been increasingly angry about how Yahoo’s stock market capitalisation has slumped as it failed to keep pace with smarter rivals such as Apple, Google and Facebook.

Yahoo is valued at around $19 billion, but much of that comes from its shareholding in Alibaba and a 35% stake in Yahoo Japan.

Analysts said it is likely that Yahoo will be able to sell its remaining stake in Alibaba by 2015.