Yahoo owns 22.4% of the Chinese e-retail company, and plans to sell about 140M of its shares. So it has to be thrilled to learn that Alibaba has sold its new stock at $68 a share — the high end of the range it had anticipated. Alibaba will collect $21.8B, making this the largest IPO ever in the U.S. — ahead of the $17.9B Visa raised 2008. Underwriters have an option to sell additional shares which, if exercised, could push the total above the world record $22.1B raised in 2010 by the Agricultural Bank of China.
Yahoo agreed to sell enough stock to lower its stake to 16.3% and stands to collect about $8.3B . Execs have promised to return about half of the proceeds to its shareholders. It will still own $27.3B worth of Alibaba shares. That suggests that investors believe that the Alibaba holdings account for 84% of Yahoo’s $42.4B market value.
The IPO values Alibaba at nearly $168B, which makes it bigger than Disney and Amazon. It also will turn founder Jack Ma into one of the world’s wealthiest people with $14B, at least on paper. Shares will trade under the symbol “BABA” on the New York Stock Exchange. It had 279M active buyers in June, up nearly 51% from the month in 2013. It generated $3.77B in net income in the year ending in March on revenues of $8.46B.