Altaba Looks to Buy Back 24% of Shares in Exchange for Alibaba Stock

   By Colin Kellaher 
 

Altaba Inc. (AABA) Thursday said it launched a tender offer for about 24% of its shares, using Alibaba Group Holding Ltd. (BABA) stock as currency, in a move that will reduce Altaba's stake in the operator of two of China's largest e-commerce sites to about 11%.

Altaba said it would pay 0.35 Alibaba American depositary shares, plus cash tied to Alibaba's volume-weighted average price, each for 195 million Altaba common shares.

Altaba, the former Yahoo!, became a closed-end investment fund after selling the core Yahoo internet business to Verizon Communications Inc. (VZ). Its shares have traded at a large discount to net asset value amid uncertainty about the timing and tax implications of any transactions involving its stakes in Alibaba and Yahoo Japan Corp. (4689.TO).

"This accretive transaction is a natural next step toward realizing Altaba's investment objective: the reduction of the discount to net asset value at which our shares trade," said Thomas McInerney, chief executive of Altaba.

At the close of trading Wednesday, Alibaba ADSs traded at $208.30, while the Alibaba VWAP was $208.8445. Altaba shares closed Wednesday at $80.28, a 26.5% discount to the fund's most recently published adjusted net asset value of $109.29.

At those prices, Altaba said the tender offer would be valued at $83.35 a share.

Altaba said it plans to sell part of its Alibaba holdings to pay taxes related to the tender offer and to fund part of the cash portion. Upon completion of the tender offer and the stock sales, Altaba expects to own a roughly 11% stake in Alibaba.

"Our board and management determined that this tender offer represents the fastest and most efficient way to return a substantial amount of capital to our shareholders now," Mr. McInerney said. "We will continue to evaluate additional actions and transactions that we can pursue in the months ahead. Our work is hardly done."

Write to Colin Kellaher at [e-mail]

(END) Dow Jones Newswires

June 07, 2018 07:13 ET (11:13 GMT)

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