Yahoo closes $9.3b deal with China's Alibaba Group

SAN FRANCISCO (AP) - Yahoo has completed a long-awaited US$7.6 billion (S$9.3 billion) deal with China's Alibaba Group, generating a windfall that could help ease the pain of Yahoo shareholders who have endured the company's foibles during the past few years.

After Yahoo distributes most of the proceeds to its shareholders, its recently hired chief executive officer (CEO) Marissa Mayer will still have an extra US$1.3 billion to finance acquisitions or hire new talent as she tries revive the company's revenue growth.

Tuesday's resolution comes four months after Yahoo and Alibaba Group outlined the details of a complex transaction that took more than two years of on-again, off-again negotiations to hammer out. The deal will give Alibaba greater autonomy as it prepares to pursue an initial public offering of stock within the next three years, while rewarding Yahoo for one of the few moves that has gone right for the troubled company in the past few years.

Yahoo paid US$1 billion for a 40 per cent stake in Alibaba in 2005 and is now reaping a huge return. Alibaba is paying US$7.1 billion in cash and stock to buy back half of Yahoo's holdings. Another US$550 million is being paid to Yahoo under a revised technology and patent licensing agreement with Alibaba.