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Yahoo! share price up, bolsters share buyback program

yahoo_ad_serviceYahoo! Inc announced on Thursday its board had authorized an additional $2 billion to its share-repurchasing program.

According to a filling with the US Securities and Exchange Commission, the company has $726 million left of its $5-billion share buyback program announced in November 2013, before the new initiative kicks in.

The new program, which is set to expire in March 2018, is part of Chief Executive Marissa Mayer’s efforts to boost shareholder returns after the company received more than $5 billion from Alibabas record initial public offering in September last year.

Yahoo acquired a 40% stake in the Chinese e-commerce behemoth in 2005 for $1 billion in cash and its operations in the country. The move, that paid out hugely, was widely credited to Yahoo co-founder Jerry Yang.

Three years ago, Alibaba bought back a 20% stake in itself from the U.S. web portal for $7.1 billion, which valued the Chinese company at $35 billion at the time. Yahoo also received an additional $550 million in relation to a patent agreement with Alibaba.

Since 2012, Yahoo has spent over $9.7 billion in share repurchases as investors have voiced demands for higher returns. Activist investor Starboard Value LP, which purchased a stake in Yahoo last year, has criticized Ms. Mayers spending on acquisitions saying that her actions are lowering investor returns.

Yahoo acquired two companies over the past year with a joint value of $800 million.

In a letter sent earlier this month, Starboard Value asked Yahoo to spend $4 billion in share buyback, while also initiating a cost reduction program. The activist investor has previously suggested Yahoo to spin-off its Japanese operations.

In January, Yahoo announced a tax-free spin-off of its investment, which is valued at around $40 billion, in the e-commerce Chinese giant. The companys stock jumped nearly 10% on the news.

Yahoo gained 0.61% on Thursday and closed at $44.47 on the NASDAQ, marking a one-year increase of 25.44%. The company is valued at $41.38 billion. The stock edged up 1.60 on Friday to $45.18 during pre-market trading.

According to the Financial Times, the 32 analysts offering 12-month price targets for Yahoo have a median target of $58.50, with a high estimate of $69.00 and a low estimate of $50.00. The median estimate represents a 31.55% increase from the last closing price.

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