Sales of Yahoo (NASDAQ: YHOO) were popping in early Monday trading as confirmation of the speculation the company was going to sell some of its holdings in Alibaba has investors liking what they heard.
Yahoo owns approximately 40 percent of Alibaba, and said it will sell about 50 percent of its stake, which would raise about $7.1 billion for the tech giant.
Per terms of the deal, it'll be for preferred stock in Alibaba as well as cash.
The company stated it will give back most of the cash to its shareholders.
Industry watchers see this as probably clearing the way for a probable initial public offering by the Chinese tech firm.
When Alibaba goes public, other terms of the sell are it will have to allow Yahoo to sell it shares in the company at that time, or Alibaba will have to acquire 254 percent of Yahoo's remaining shares it holds in the company.
Yahoo was trading at $15.53, gaining $0.11, or 0.71 percent, as of 11:03 AM EDT. It has soared as high as $16.00 on the day.
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