Bye-bye, Altaba. The Yahoo spin-out created to house Yahoo’s lucrative stake in Alibaba and Yahoo Japan announced today that it will sell its lucrative stake in Alibaba and shut up shop.
The entity has long existed as a proxy to Alibaba — some might argue Yahoo was the same in its final years — and the sale is expected to net shareholders around $40 billion.
Altaba was formed following AOL’s 2017 acquisition of Yahoo to create Oath — disclaimer: that’s TechCrunch’s parent, and it is now called Verizon Media Group — to keep hold of the 15 percent stake in Alibaba and a 35.5 percent stake in Yahoo Japan that Yahoo owned.
Those Yahoo Japan shares were unloaded in September for more than $4 billion, and now Altaba will shift its remaining Alibaba holdings — that’s around 11 percent of the company following a partial sale last year; Altaba is Alibaba’s second-largest stakeholder — and disappear from the world by Q4.
The sale is expected to generate a net return of around $40 billion for Altaba stockholders — the provided range is between $39.8 billion and $41.1 billion based on share prices and associated expenditure — and it’ll happen in two parts. The first will see up to 50 percent of the stake sold; the rest will be traded if Altaba receives approval from its stockholders.
Therein Altaba — and Yahoo’s long association with Alibaba — will be over. The reality is that this essentially happened following the Oath deal; Altaba was merely created to hold the asset and at some point that would mean liquidating it. That day is now confirmed and on its way.
“Since June of 2017 we have taken a series of aggressive actions designed to drive shareholder value and these have yielded measurable results as our trading discount has narrowed and our stock has meaningfully outperformed a composite of its underlying assets. The right next action for shareholders is the plan we are announcing today as it represents the most definitive step, generally within our control, that we could take to reduce the discount to net asset value at which our Shares trade,” said Altaba CEO Thomas J. McInerney in a statement.
“Stocks are for trading. Any shareholder has the right to deal stock anytime on the market, for any purpose. We’re happy to have had Yahoo invest in Alibaba in the past and to see it now collecting a strong return on its investment,” an Alibaba spokesperson told TechCrunch.
The story of Yahoo’s involvement with Alibaba is a legendary one.
Yahoo invested $1 billion for 30 percent of Alibaba back in 2005 through a (now famous) story between Yahoo CEO Jerry Yang and Alibaba president Jack Ma. Ma, a former English teacher who was then a government employee, was assigned to accompany Yang on a planned trip to see the Great Wall of China, and their relationship went from there.
Yahoo infamously sold half of its stake back to Alibaba in 2012 through a deal that valued the shares at $13. Just two years later, Alibaba went public in a record-breaking U.S. IPO. Shares were $68 at the bell, and today they are worth around $181, so Yahoo missed out on an even greater fortune.