Yahoo, Alibaba End Years of Bickering With $7B Deal

It's a resolution for what All Things Digital's Kara Swisher calls "perhaps the longest running global cat fight in Internet history": In a $7.1 billion deal, Yahoo is selling back up to half its 40% stake in China's Alibaba, the Wall Street Journal reports. For the US internet giant, that means $6.3 billion cash and $800 million in preferred Alibaba stock. Most of the $4 billion Yahoo ultimately takes home after taxes will go to shareholders, many of whom are still smarting over Yahoo's 2008 rejection of Microsoft's bid to acquire the company for $33 per share, reports the AP. Yahoo's sagging stock traded at $15.42 on Friday.

Yahoo bought its stake in Alibaba in 2005 for $1 billion, in a deal driven by Yahoo co-founder Jerry Yang, who had a good relationship with Alibaba founder Jack Ma. But under current Yahoo boss Carol Bartz, the companies' relationship has been frosty, as Alibaba has sought to buy back the stake, notes Reuters. "Credit to Jack Ma, he's a wheeler and dealer and he got a very good deal on this one," says an analyst. The transaction values Alibaba at $35 billion, and the deal inches Alibaba closer to an IPO. (More Alibaba stories.)