Softbank is selling its 4% stake in Yahoo to Citibank to repay a loan it took back in 2004.But Softbank will continue to have joint ownership with Yahoo of Yahoo Japan, which is run as a separate business.
Yahoo also owns 40% of Chinese Internet company Alibaba.
Many investors believe these Asian assets make up the majority of Yahoo’s value. But they’ve also been a source of trouble because of the complicated ownership structure. In May, for instance, Alibaba sold its payment product Alipay to a subsidiary controlled by Alibaba founder Jack Ma — without informing Yahoo and Softbank first.
Earlier this year, rumours emerged that Yahoo was going to sell Yahoo Japan entirely to Softbank. But that change isn’t happening, and Softbank will continue to own 42% of that unit; Yahoo owns 35%.
So this change simply looks like Softbank trying to shore up its finances, rather than a wholesale withdrawal from its relationship with Yahoo.
Softbank’s stake is worth $650 million, but will be used to repay a $1.1 billion loan — the terms of that loan allowed it to be repaid in cash or Yahoo stock. Softbank originally bought the Yahoo shares in 1995, and will book a a one time profit of $990 million — the difference between what it paid and the value of the stock as it repays the loan.
Softbank will retain a 0.002% share of Yahoo.