China e-commerce company to buy back stake for €5bn

Alibaba Group Holding Ltd, China’s largest e-commerce company, has agreed to repurchase a 20% stake in itself from US web portal Yahoo for €5.6m ahead of a potential initial public offering.

Yahoo will receive at least €5bn in cash and as much as €630m in newly issued Alibaba preferred stock, the companies said.

At the time of an IPO, Alibaba will be required to either buy back a quarter of Yahoo’s current stake or let Yahoo sell the shares. The deal values Alibaba at about €27.5bn.