Yahoo! dumps its stake in Chinese venture

Sells Alibaba.com direct stake for about $150 million, but will still retain an indirect interest in the company

Tags: ChinaJordanMergers and acquisitionsUnited Arab Emirates
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Yahoo! dumps its stake in Chinese venture Yahoo! sold its direct stake in Alibaba.com after the value of its investment increased since a 2007 IPO. (Getty Images)
By  Vineetha Menon Published  September 15, 2009

Yahoo! has made the decision to sell its 1.14% direct stake in the Chinese e-commerce firm Alibaba.com for about $150 million after evaluating its financial investment in the company.

Yahoo! formed a long-term strategic partnership with Alibaba.com in 2005, which involved merging Yahoo!’s China business with the company to create one of the largest internet companies in the country.

Earlier this month, Yahoo!’s CEO Carol Bartz said in an CNBC interview that their Alibaba stake was a means to profit in the Chinese market without directly operating there and viewed it “as a very good investment for the future”. But it’s one that has increased substantially in value since 2007 when Yahoo! put in close to $100 million in connection with the company’s initial public offering on the Hong Kong Exchange.

"Yahoo regularly evaluates its financial investments and the value of its 1 percent direct IPO investment in Alibaba.com has increased substantially. This increase is why Yahoo sold this financial position," Yahoo! told Reuters yesterday, adding that it would result in pre-tax proceeds of about $150 million.

Yahoo! said it will continue to maintain a 40% interest in Alibaba Group, which owns about 70% of Alibaba.com, giving Yahoo! a 28% indirect interest in Alibaba.com.

Revealing that emerging markets are an important part of Yahoo!’s business today, the company made its first major move into the Middle East with its acquisition of Arab online media brand Maktoob.com.

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