At the minimum price, and assuming the repurchase of half of Yahoo’s stake, the company would receive $7.1 billion, including $6.3 billion in cash and up to $800 million in new Alibaba preferred stock.

Meanwhile, the deal sets up a “framework” for Yahoo to “monetize its remaining interest in Alibaba in stages…”

…At the time of a future IPO of Alibaba Group, the company will be required to either purchase half of Yahoo remaining stake at the IPO price, or to allow Yahoo to sell those shares in the IPO. And…

– …Following an Alibaba Group IPO, Yahoo would have the option to sell its remaining shares at any time.

– The deal also includes a provision that allows Alibaba a license to continue to operate Yahoo China under the current brand for up to four years. Restrictions on Yahoo’s ability to make other investments in China will terminate.

– As noted, Alibaba will make an upfront lump sum royalty payment of $550 million to Yahoo, and will make continuing royalty payments for up to four years. Alibaba will license certain patents to Yahoo.

Further shedding light on the deal, both companies made a joint statement to the press.

“This agreement is a result of extensive discussions between the two parties and a comprehensive review of both taxable and tax-efficient alternatives. Yahoo and Alibaba believe this agreement to be the best path to align incentives and maximize value for shareholders of both companies and it paves the way for Alibaba to achieve future public market liquidity for all of Alibaba’s shareholders. For Yahoo, the agreement provides for a staged exit over time, balancing near-term liquidity and return of cash to shareholders with the opportunity to participate in future value appreciation of Alibaba.”