Yahoo Inc. is considering cutting its 40 percent stake in Alibaba Group Holding Ltd. to about 15 percent in a deal that would also see it sell off its Yahoo Japan Corp. stake, two sources briefed on the matter said.
The Yahoo board was scheduled to meet Thursday to consider the transaction, according to the sources, who asked to remain anonymous because the deliberations are private.
The deal, which may let Alibaba repurchase the stake in a tax-free manner, values the Asian assets at about $14 a Yahoo share, or more than $17 billion, one of the sources said. Yahoo also would sell all of its stake in Yahoo Japan Corp. in the deal, this source said.
Alibaba stepped up efforts to buy back the stake after the September ouster of Yahoo Chief Executive Officer Carol Bartz, who had opposed a sale. Yahoo, buffeted by user attrition and search-market share losses to Google Inc., is also considering proposals by private-equity firms seeking to buy minority stakes.
“Yahoo is probably more determined to find a solution to this,” said Paul Wuh, head of Internet research at Samsung Securities Co. in Hong Kong. “They obviously changed their CEO, which makes it a bit easier now.”
Yahoo acquired its stake in Alibaba, based in Hangzhou, China, for about $1 billion in 2005. Alibaba Group is China’s biggest e-commerce company.
Yahoo spokeswoman Dana Lengkeek declined to comment and Alibaba spokesman John Spelich didn’t immediately reply to two phone calls and an email seeking comment.
The transaction has a complicated structure and may take several weeks to complete, a person with knowledge of the matter said. Alibaba and Softbank Corp., the co-owner of Yahoo Japan, are seeking to repurchase stakes held by Yahoo without triggering taxes associated with the gains on the investments.
To help do that, Alibaba and Softbank each would create a standalone entity, investing cash and operating assets in each, another person said. Yahoo would then exchange all of its stake in Yahoo Japan and most of its stake in Alibaba for those new entities. Yahoo would retain 15 percent of Alibaba, this person said.
“Both Alibaba and Softbank are putting pressure on the company to find a solution,” said Samsung’s Wuh.
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