Yahoo! Inc. (YHOO) is close to selling half of its 40 percent stake in Alibaba.com Ltd. (ALBCF.PK) to the Chinese e-commerce firm, reports said. A deal worth about $7 billion may be announced as early as Monday.
The deal may lead to the e-commerce provider going public in around 18 months. Alibaba, which runs the site Alibaba.com, intends to finance the deal with cash and debt.
Yahoo! acquired the stake in Alibaba in 2005 by paying $1 billion and giving ownership of its Chinese unit. China Yahoo! is wholly owned by Alibaba Group.
Alibaba's other shareholders include Temasek Holdings Pte., Digital Sky Technologies and Silver Lake.
While the sale will benefit the U.S. company financially, it will reduce its exposure to China, the second-largest economy in the world. Also, the struggling internet company may find itself a takeover target.
Alibaba has tried to buy the stake from Yahoo! in the past too. In last September, the company stepped up efforts to effect a deal after Carol Bartz, under whom talks had reached nowhere, left as chief executive.
Things have not improved much after Bartz left. Last week Scott Thompson resigned as CEO and as a director of the company, following calls from investors to fire him as inaccurate information was given about his academic qualification.
The company has named Ross Levinsohn, Yahoo's head of global media, to replace him in the interim.
YHOO closed on Friday at $15.42, up 3.70 percent, on a volume of 32.68 million compared to the average volume of 15.87 million.
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