Regulatory filings indicate that Alibaba Group Holding Ltd (NYSE:BABA) is set to carry out its IPO at a share price target of between $66 and $68, against an initial estimate offer of between $60 and $66. The hiking of share price range is set to be of benefit to Yahoo! Inc. (NASDAQ:YHOO), which is set to offload part of its stake in the giant Chinese online company.
During an interview on Bloomberg, Triton Research co-founder, Rett Wallace, pointed out that Alibaba Group Holding Ltd (NYSE:BABA)’s IPO was one of the most packaged offerings ever seen in the recent past. Wallace remains optimistic on the offering, being a success as lessons from previous flops have already been learnt.
“I think we saw with Twitter Inc. (NYSE:TWTR) how to do it correctly. Goldman Sachs Group Inc. (NYSE:GS) nailed it with Twitter as far as not making any of the mistakes, as far as selectively distributing information to some people and not others. […] The market malfunction with Facebook Inc. (NASDAQ:FB) was not easy to predict, but that’s what made it a perfect storm. All of those things have now been’ controlled for,” said Mr. Wallace.
Yahoo! Inc. (NASDAQ:YHOO) has enjoyed an impressive run in the market especially with the ongoing frenzy surrounding the imminent Alibaba Group Holding Ltd (NYSE:BABA)’s IPO. The IPO is of importance to Yahoo! Inc. (NASDAQ:YHOO) as the search engine giant will be able recoup part of the money it invested in the company a few years back.
Yahoo! Inc. (NASDAQ:YHOO)’s 22.4% stake in Alibaba Group Holding Ltd (NYSE:BABA) was valued at $36 billion at the initial IPO’s price range between $60 and $66. The valuation has since been upped after Alibaba increased its share price range to be between $66 and $68. Alibaba is considered as one of Yahoo! Inc. (NASDAQ:YHOO)’s remaining valuable assets and expected to provide the much-needed cash that may help CEO, Marissa Mayer, on her push to turn around the company’s fortunes.
Cash from the offering may probably help Yahoo! Inc. (NASDAQ:YHOO) carry out acquisitions that would help bolster earnings. Yahoo’s shareholders are also expected to gain, should Yahoo! Inc. (NASDAQ:YHOO) decide on offering dividends or carry out stock buybacks.
In the second quarter of 2014, D. E. Shaw upped his stake by 48% in Yahoo! Inc. (NASDAQ:YHOO) and now owns 16.19 million shares of the company.