Alibaba raises funds to buy back half of Yahoo's stake for $7b

San Francisco: Yahoo! Inc. may sell half of its 40 per cent stake in Alibaba Group Holding Ltd. back to the Chinese internet company for $7 billion (Dh25.7 billion) and consider a dividend payment, AllThingsD website reported, citing people it didn't identify.

The deal values China's biggest e-commerce operator at $35 billion, and the closely held company is in the midst of raising funds to buy back the stake, the technology blog site reported yesterday. Yahoo's board met Friday to review the transaction, which may be announced as early as tomorrow, it said.

Alibaba stepped up efforts to repurchase stock held by Yahoo in September, when the US company fired former chief executive officer Carol Bartz, who opposed a transaction.

The web portal, which failed to keep pace with growth at Google Inc. and Facebook Inc., is pursuing active discussions with the Chinese company, Scott Thompson, who succeeded Bartz before stepping down this month, said in April.

"We do not comment on rumour and speculation," John Spelich, a Hong Kong-based spokesman at Alibaba, said.

The possible deal between Yahoo and Alibaba won't involve the Sunnyvale, California-based company selling its stake in Yahoo Japan Corp., the report said. The Japan company is a joint venture with Softbank Corp.

Lisa Tam, a public relations manager at Yahoo in Hong Kong, didn't immediately reply to messages sent by phone and e-mail seeking comment. Toru Nagano, a spokesman at Yahoo Japan, and Takeaki Nukii, a spokesman at Softbank, declined to comment.

Yahoo may use after-tax proceeds from the transaction to repurchase its shares, it said.

Share price falls

Yahoo fell 2.7 per cent to $14.87 in New York trading Friday, valuing the company at $18 billion. By comparison, Google is valued at $203 billion and Facebook is valued at $104.2 billion.

Alibaba may consider an IPO after the deal, the report said. The group has a unit listed in Hong Kong.

Yahoo board member Daniel Loeb is expected to approve the transaction with Alibaba, according to the AllThingsD report.