The two companies announced the deal late Sunday, although there had been earlier news reports saying the companies were close to an agreement.
If Alibaba purchases half of the stake for $7.1 billion, it will pay at least $6.3 billion in cash and up to $800 million worth of newly issued Alibaba preferred stock, the companies said.
The companies also said the deal sets up a framework for Yahoo! to eventually monetize all of its Alibaba stake.Under this framework, if Alibaba holds an initial public offering in the future, it will be required to either purchase one-quarter of Yahoo!'s current stake at the IPO price or allow Yahoo! to sell its stake in the IPO. Yahoo! would also have registration rights and marketing support from Alibaba to help it to sell its remaining shares following a customary lock-up period after the IPO. > > Bull or Bear? Vote in Our Poll Shares of Yahoo! closed Friday up 55 cents at $15.42.