What will Yahoo! Inc. (YHOO) Do With Alibaba Group Holding Ltd (BABA)’s IPO Cash?


The Alibaba Group Holding Ltd (NYSE:BABA)’s IPO will result in Yahoo! Inc. (NASDAQ:YHOO) getting a pile of cash, but whether the company will be able to deploy it profitably or not is a big question. CNBC‘s Josh Lipton reported on the money that Yahoo! Inc. (NASDAQ:YHOO) would be generating from this IPO and what are the company’s plans for deploying it.

“Yahoo’s CEO, Marissa Mayer now has a problem that other executives would only wish for, what you do with a windfall of cash, how much exactly are we talking about here. Well, remember Yahoo is going to sell 27% of its stake in Alibaba, now if that prices at $68, then Yahoo’s after tax haul would be $6 billion, according to the team over at B. Riley […],”  Lipton said.

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Lipton mentioned that Yahoo! Inc. (NASDAQ:YHOO) had hinted that it would be returning half of the cash that it generates through Alibaba Group Holding Ltd (NYSE:BABA)’s IPO to shareholders, but its not clear whether the company would go ahead and do it. According to Lipton, analysts on the Street and investors expect Yahoo! Inc. (NASDAQ:YHOO) to declare dividends or go for a share buyback from the money that it generates through the IPO.

Lipton believes that Yahoo! Inc. (NASDAQ:YHOO) can also go for an acquisition spree and cites the recent acquisition that Mayer has gone for to support his argument. After the IPO, Yahoo! Inc. (NASDAQ:YHOO) will still have a 16% stake in Alibaba Group Holding Ltd (NYSE:BABA) that it can’t sell for a while.

As of June 30, 2014, D.E. Shaw’s firm D.E. Shaw owns over 16 million shares in Yahoo! Inc. (NASDAQ:YHOO).

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