Yahoo! Inc.’s share price down, to keep a larger stake in Alibaba after its IPO

Yahoo! Inc. has reached an agreement with its part-owned Chinese e-commerce group Alibaba, for the latter to offer fewer shares in its IPO, allowing Yahoo to keep a larger stake.

The Chinese e-commerce giant had planned on selling 208 million shares, but has agreed to a 140 million target, Ken Goldman, Yahoo’s chief financial officer, said in a statement yesterday, cited by Bloomberg.

The company, 23% of which is owned by Yahoo, is valued at $168 billion to $220 billion, and its IPO might be the largest in US history, Bloomberg reported. The listing is the most anticipated event in the industry since the introduction of Facebook to the stock market in 2012.

“Alibaba steals the show again,” Brian Wieser, analyst at Pivotal Research Group LLC, said for Bloomberg. “It’s the dominant moving piece in Yahoo’s valuation.”

Meanwhile, Goldman added that Yahoo will return the proceeds to shareholders, indicating a buyback or dividend.

“We are committed to return at least half of the after-tax IPO proceeds to shareholders, in line with our overarching commitment to maximizing shareholder value through prudent capital allocation.”

The news comes at a time of declining sales for the US-based giant. The company reveled in a conference call that Q2 revenue was at $1.04 billion, short of expectations, while net income was at $269.7 million, down from $331.2 million a year ago.

“Given our top priority of long-term sustainable growth, we are not satisfied with our results this past quarter,” Yahoo CEO Marissa Mayer said.

Yahoo! Inc. was 0.25% down to close at 35.61 dollars per share yesterday, marking a one-year change of +32.48%. According to information published on CNN Money, the 26 analysts offering 12-month price forecasts for Yahoo! Inc. have a median target of 40.00, with a high estimate of 50.00 and a low estimate of 32.00. The median estimate represents a +12.33% increase from the last price of 35.61.