The company created to hold Yahoo’s considerable stake in Alibaba, called Altaba, will be sold and close shop by Q4 of this year, according to reports.
The outfit also held shares in Yahoo! Japan, but those were sold in September. The remaining holdings, which are about 11 percent of Alibaba, are expected to generate about $40 billion for its stockholders.
“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.
An Alibaba spokesperson said the sale shouldn’t be seen as anything out of the ordinary. “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,” the spokesperson said.
Yahoo! originally invested $1 billion for 30 percent of Alibaba in 2005, when Yahoo! CEO Jerry Yang met Alibaba President Jack Ma, as Ma was assigned to accompany Yang on a trip to the Great Wall of China.
“It was a big risk when (Yang) put $1 billion into Alibaba,” Ma told Fortune. “We went back and forth over the terms, and almost ended the deal at one point.”
Yahoo! sold its stake back to Alibaba in 2012, when the shares were valued at $13. Alibaba went public two years later with one of the biggest IPOs ever. At the bell, shares were $68, and today they’re in the neighborhood of $181.