Yahoo! and Alibaba Reach Agreement on Comprehensive Plan for Alibaba Stake
Agreement Realizes Significant Value, Immediate Liquidity and Path
to Future Monetization
Yahoo! Board Increases Share Repurchase Plan by US$5 Billion
SUNNYVALE, Calif. & HANGZHOU, China--(BUSINESS WIRE)--
Yahoo! Inc. (NASDAQ:YHOO) and Alibaba Group Holding Limited today
announced they have entered into a definitive agreement for a staged and
comprehensive value realization plan for Yahoo!'s stake in Alibaba.
The first step is the repurchase by Alibaba of up to one-half of
Yahoo!'s stake, or approximately 20% of Alibaba's fully-diluted shares.
The purchase price will be based on a valuation of Alibaba to be
established through equity financings that Alibaba intends to undertake
to finance the transaction, subject to a floor valuation of
approximately US$35 billion. The agreement includes substantial
financial incentives for Alibaba to raise the additional equity at a
valuation higher than US$35 billion. At the minimum price and assuming
the initial repurchase of the full 20% stake, Yahoo! would receive from
Alibaba consideration of approximately US$7.1 billion, composed of at
least US$6.3 billion in cash proceeds and up to US$800 million in
newly-issued Alibaba preferred stock.
The agreement also establishes a framework for Yahoo! to monetize its
remaining interest in Alibaba in stages. First, at the time of an
initial public offering (IPO) of Alibaba in the future, Alibaba will be
required either to repurchase one-quarter of Yahoo!'s current stake at
the IPO price or allow Yahoo! to sell those shares in the IPO. Second,
following such an IPO, Yahoo! has registration rights and rights to
marketing support from Alibaba to enable Yahoo! to dispose of its
remaining shares, at times of Yahoo!'s choosing following a customary
lock-up period.
This agreement is a result of extensive discussions between the two
parties and a comprehensive review of both taxable and tax-efficient
alternatives. Yahoo! and Alibaba believe this agreement to be the best
path to align incentives and maximize value for shareholders of both
companies and it paves the way for Alibaba to achieve future public
market liquidity for all of Alibaba's shareholders. For Yahoo!, the
agreement provides for a staged exit over time, balancing near-term
liquidity and return of cash to shareholders with the opportunity to
participate in future value appreciation of Alibaba.
"Today's agreement provides clarity for our shareholders on a
substantial component of Yahoo!'s value and reaffirms the significance
of our relationship with Alibaba," said Ross Levinsohn, Interim CEO of
Yahoo!. "We look forward to continued collaboration with the Alibaba
team on business initiatives as we explore joint opportunities for
growth and benefit from Alibaba's future. I want to thank Jack Ma, Joe
Tsai and the Alibaba team, as well as Tim Morse, Michael Callahan and
our Yahoo! team for their dedication in achieving this successful
outcome."
"This transaction opens a new chapter in our relationship with Yahoo!,"
said Jack Ma, Chairman and Chief Executive Officer of Alibaba Group. "I
look forward to working with Ross Levinsohn and the Yahoo! team as
Alibaba builds China's leading e-commerce company. Yahoo!'s global
audience reach will provide attractive partnership opportunities for
Alibaba to explore markets outside of China. The transaction will
establish a balanced ownership structure that enables Alibaba to take
our business to the next level as a public company in the future."
"We look forward to delivering the proceeds of the near-term transaction
to our shareholders, and to the further enhancement of value and the
additional monetization in the future that this agreement enables," said
Timothy R. Morse, Executive Vice President and Chief Financial Officer
of Yahoo!.
In addition to the share repurchase, the companies have also agreed to
amend their existing technology and intellectual property licensing
agreement. Among other things, this amendment will result in Yahoo!
granting Alibaba a transitional license to continue to operate Yahoo!
China under the Yahoo! brand for up to four years, while restrictions on
Yahoo!'s ability to make other investments in China will be terminated.
Alibaba will make an upfront lump sum royalty payment of US$550 million
to Yahoo! and continuing royalty payments for up to four years. In
addition, Alibaba will license certain patents to Yahoo!. Upon closing
of the repurchase transaction, the Alibaba shareholders' agreement will
be amended so that the parties' respective rights will be commensurate
with the parties' post-closing level of ownership in Alibaba. Yahoo!
will continue to be represented on Alibaba's board of directors with the
right to appoint one of four existing directors.
Yahoo! intends to return substantially all of the after-tax cash
proceeds to shareholders following the closing of the transaction. While
the form of the return of capital to shareholders has not yet been
finalized, Yahoo!'s board has increased Yahoo!'s share buyback
authorization by US $5 billion concurrently with this transaction.
The transaction is subject to customary closing conditions. Alibaba will
be required to close the repurchase with respect to at least one-quarter
of Yahoo!'s current stake in Alibaba regardless of the amount of
financing raised, and up to one-half of Yahoo!'s current stake if it
obtains the requisite financing. Alibaba intends to finance the
repurchase through a combination of its own cash resources, debt, equity
and equity-linked financing. The transaction is expected to close within
approximately six months.
UBS Investment Bank acted as lead financial advisor to Yahoo! and Allen
& Company LLC and Goldman Sachs & Co. also served as financial advisors.
Skadden, Arps, Slate, Meagher & Flom LLP acted as lead legal counsel to
Yahoo! and Weil, Gotshal & Manges LLP also acted as legal counsel.
Munger, Tolles, & Olson LLP acted as legal counsel to the Yahoo! Board
of Directors. Credit Suisse acted as lead financial advisor to Alibaba
and Wachtell, Lipton, Rosen & Katz acted as lead legal counsel to
Alibaba. Freshfields Bruckhaus Deringer LLP acted as counsel to Alibaba
on certain financing and Hong Kong legal matters and Fenwick & West LLP
acted as counsel to Alibaba on intellectual property matters.
Conference Call and Webcast Information
Yahoo! will host a conference call to discuss today's announcement at
5:45 a.m. Pacific Time / 8:45 a.m. Eastern Time Monday, May 21, 2012. A
live webcast of the conference call, together with a supplemental
presentation concerning the transaction, can be accessed through the
Company's Investor Relations website at http://investor.yahoo.net/.
The dial-in number for the live conference call is (866) 659-9165.
Participants calling from outside the United States may dial (617)
399-5178. The passcode 73540611# is required to access the call. In
addition, an archive of the webcast can be accessed through the same
link. An audio replay of the call will be available for one week
following the conference call by calling (888) 286-8010 or (617)
801-6888, passcode: 35326266.
About Yahoo!
Yahoo! is the premier digital media company, creating deeply personal
digital experiences that keep more than half a billion people connected
to what matters most to them, across devices and around the globe. And
Yahoo!'s unique combination of Science + Art + Scale connects
advertisers to the consumers who build their businesses. Yahoo! is
headquartered in Sunnyvale, California. For more information, visit the
pressroom (pressroom.yahoo.net)
or the company's blog, Yodel Anecdotal (yodel.yahoo.com).
About Alibaba Group
Alibaba Group is a leading e-commerce company based in China. Since it
was founded in 1999, Alibaba Group has grown to include the following
core businesses: Alibaba.com
(HKSE: 1688; 1688.HK), Alibaba Group's flagship company and a global
e-commerce platform for small businesses; Taobao Marketplace, China's
leading C2C online shopping destination; Tmall.com,
a popular B2C online marketplace in China for quality, brand name goods;
eTao, a comprehensive shopping search engine; Alibaba Cloud Computing, a
developer of advanced distributed cloud computing services; and China
Yahoo!, one of China's leading Internet portals. Alipay, a leading
third-party online payment service in China, is an affiliate of Alibaba
Group.
Forward-Looking Statements
This press release contains forward-looking statements (including in the
quotations in this press release) concerning the agreement entered into
by Yahoo! with Alibaba Group Holding Limited, including, without
limitation, statements about the expected timing of closing of the
transactions contemplated by the agreement, the ability of Yahoo! to
monetize its holdings in Alibaba in both the near-term and in the
future, potential future actions by Yahoo! and Alibaba concerning future
business initiatives between Yahoo! and Alibaba and the potential for an
initial public offering of Alibaba shares, and other expected benefits
of the agreement and related agreements. Risks and uncertainties may
cause actual results and benefits of the transactions contemplated by
the agreement and related agreements to differ materially from
management expectations. The potential risks and uncertainties include,
among others, the failure to consummate or delays in consummating the
transactions contemplated by the agreement; uncertainty regarding the
future valuation of Alibaba; uncertainty regarding the financing of the
transactions; uncertainty regarding if and when there will be an initial
public offering of Alibaba shares; uncertainty regarding any future
business initiatives with Alibaba; general economic and market
conditions; and the possibility that some or all of the expected
benefits of the agreement and related agreements may not be realized.
All information set forth in this press release is as of May 20, 2012.
Yahoo! does not intend, and undertakes no duty, to update this
information to reflect subsequent events or circumstances. More
information about potential factors that could affect Yahoo!'s business
and financial results is included under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" in Yahoo!'s Annual Report on Form 10-K for the fiscal
year ended December 31, 2011, as amended, and Quarterly Report on Form
10-Q for the quarter ended March 31, 2012, which are on file with the
Securities and Exchange Commission ("SEC") and available at the SEC's
website at www.sec.gov.
Yahoo! is the trademark and/or registered trademark of Yahoo! Inc. All
other names are trademarks and/or registered trademarks of their
respective owner.
Yahoo! Media Relations:
Yahoo! Inc.
Dana Lengkeek,
408-349-1130
danal@yahoo-inc.com
or
Sard
Verbinnen & Co
Charles Sipkins, 310-201-2040
csipkins@sardverb.com
or
Yahoo!
Investor Relations:
Yahoo! Inc.
Joon Huh, 408-349-3382
jhuh@yahoo-inc.com
or
Alibaba
Group Contact:
International
Alibaba Group
John
Spelich, +852 9017-7444
johnspelich@hk.alibaba-inc.com
or
U.S.
Sard
Verbinnen & Co
Paul Kranhold/Jenny Gore, 415-618-8750
pkranhold@sardverb.com
jgore@sardverb.com
Source: Yahoo! Inc.
News Provided by Acquire Media
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