Alibaba To Buy $7 Billion Stake From Yahoo!
May 20, 2012 by Douglas A. McIntyre
Rumors once again that Alibaba, the China e-commerce firm, will buy a $7 billion stake of its own equity from Yahoo! (NASDAQ: YHOO) This would be about half of Yahho!’s stake
The most recent rumor is from Bloomberg.
Some speculate that the cash on the portal company’s balance sheet will make it a more attractive buy out target
However, the cash could be used in other ways. One would be to buy bad shares. The amount would allow Yahoo! To buy a third of its stock based on its current market cap. It could also offer a very large one time dividend as Microsoft (NASDAQ: MSFT) did over a decade ago. Interesting enough a $1 billion plus sale and license of patents will allow Aol (NYSE: AOL) to do the same thing
Yahoo! Could also move onto to M&A trail. New interim CEO Ross Levinsohn is a known deal maker. But a number of analysts believe Yahoo! Should fix its own problems first
Douglas A McIntyre
