Yahoo closes $7.6 billion buy-back deal with Alibaba

The two companies have formally closed a deal, which saw Alibaba buy back part of itself from Yahoo.

Yahoo has received a healthy sum of much-needed cash now that its Alibaba deal has official closed.

Under the terms of the deal, Chinese e-commerce company Alibaba has paid Yahoo $7.6 billion to buy back half of the 40 percent of its shares that were owned by Yahoo. Yahoo received around $6.3 billion in cash and $800 million in preferred Alibaba shares. Alibaba has also paid Yahoo a one-time cash amount of $550 million related to an existing technology license agreement between the two.

Alibaba now has the right to buy back the other half of Yahoo's remaining stake via a possible IPO down the road.

Yahoo will net around $4.5 billion after taxes, according to AllThingsD, a nice profit on the $1 billion the company paid seven years ago to invest in Alibaba. New Yahoo CEO Marissa Mayer recently said in an SEC filing that she might use the proceeds of the deal for acquisitions rather than giving the money back to stockholders.

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