The Alibaba Group will pay its key shareholder, U.S.-based Yahoo! Inc., US$7.6 billion to buy back a 20% stake in the company as a result of the agreement reached in May this year.

Yahoo is expected to receive US$7.1 billion as soon as next week, as well as a US$550 million payment related to the ending of annual licensing fees Alibaba pays Yahoo. It is estimated Yahoo will receive approximately US$4.5 billion from the deal after U.S. taxes.

The company initially invested US$1 billion in Alibaba in 2005. The sale leaves Yahoo holding approximately 20% of Alibaba shares. Under the terms of the deal, Yahoo is required to sell an additional 10% if a future Alibaba Group IPO occurs.

Source:  Business Strategies Group Hong Kong