Alibaba would swap the stock of this subsidiary for just under two-thirds of Yahoo's stake in Alibaba, the people said.

WSJ: Yahoo Weighs Plan to Cut Alibaba Stake

The appointment of Mr. Thompson is unlikely to interfere with Yahoo's discussions about the tax-free exchange of its stakes in Alibaba and Yahoo Japan for cash and other assets, some of the people familiar with the matter said.

WSJ: Yahoo Taps Scott Thompson as CEO

As part of the deal Yahoo also handed over its China-based operations to Alibaba, including its email and search services.

FORBES: Yahoo Shutters China Email��Withdrawal Looms

Yahoo Japan Corp. gained 1.7% following news that Yahoo Inc. co-founder Jerry Yang was leaving the boards of both Yahoo-named firms, as well as Chinese Internet major Alibaba Group, the parent company of Alibaba.com Ltd.

WSJ: Japan's Nikkei Rises

The first step is the repurchase by Alibaba of up to one-half of Yahoo!'

ENGADGET: Yahoo to sell back half of its Alibaba stake for $7.1 billion

Yahoo has a 24% stake in Alibaba, after the e-commerce company bought back some of its shares last year.

BBC: Alibaba profit nearly triples as revenues rise

First, at the time of an initial public offering (IPO) of Alibaba in the future, Alibaba will be required either to repurchase one-quarter of Yahoo!'

ENGADGET: Yahoo to sell back half of its Alibaba stake for $7.1 billion

In a deal being discussed with Alibaba, Yahoo, which owns about 40% of the Chinese e-commerce company, would sell between 15% and 25% of Alibaba back to the company, people familiar with the matter said.

WSJ: R��sum�� Trips Up New Yahoo Chief

In an interesting wrinkle, the latest round of speculation has Jack Ma, CEO of Chinese e-Commerce company Alibaba, being approached by private equity firms about possibly bidding for Yahoo!

FORBES: Magazine Article

Alibaba will be required to close the repurchase with respect to at least one-quarter of Yahoo!'

ENGADGET: Yahoo to sell back half of its Alibaba stake for $7.1 billion