Alibaba, Chinas e-commerce giant, has announced the successful buyback of half of Yahoos assets in their company, in a deal worth approximately $7.6 billion.

The Yahoo! board and management have met, reviewed the strategy with regard to the proceeds, and are pleased to announce that we will be returning $3 billion of the proceeds to shareholders in addition to the ‘down payment’ of $646 million made over the past few months, Yahoo CEO Marissa Mayer announced yesterday. This yields a substantial return for investors while retaining a meaningful amount of capital within the company to invest in future growth.

Business Insider published Mayers leaked memo to staff about the deal, which read in part: This outcome is terrific for Yahoo. It generates liquidity to create substantial value for our shareholders, while retaining a meaningful amount in the company to invest in our future. Also, because we still own 23 percent of Alibaba’s common stock, we have the opportunity to benefit from future upside when Alibaba IPOs.

The payout to shareholders is equal to approximately 85 percent of the net cash proceeds from this initial resale to Alibaba. The announcement did not specify whether shareholders would receive funds in the form of dividends or buybacks, or some optional combination of the two.

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In May 2012, Alibaba Group and Yahoo announced their plan to reduce Yahoos stake over a period of time in stages, as they worked on restructuring their ongoing relationship.

The initial repurchase of half of Yahoos 40 percent stake in the company was valued at $7.1 billion, with approximately $6.3 billion handed over to Yahoo in cash. The remaining $800 million went to Yahoo by way of preference shares in Alibaba Group. According to Yahoos announcement, they continue to own approximately 23 percent of Alibaba Group common stock, valued at $8.1 billion based on this most recent round of funding. Together with its preferred stock, the implied valuation of Yahoo!s entire remaining stake is approximately $8.9 billion.

The agreement stipulates that Alibaba may buy back another half of Yahoos existing shares in the case of a qualifying IPO. After an IPO, Yahoo! has the right to sell its remaining shares at its discretion following a customary lock-up period.

The completion of this transaction begins a new chapter in our relationship with Yahoo!, said Jack Ma. Chairman and Chief Executive Officer of Alibaba Group. We are grateful for Yahoo!s support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo. I look forward to working with Marissa Mayer and her team in our continued partnership.

Last year at this time, Alibaba Group were considering buying Yahoo. Ma said at the time, We are very interested in Yahoo because our Alibaba Group is so important to Yahoo, and Yahoo is also very important to us.

New-ish CEO Mayer has many hopeful she can halt the musical chairs game through Yahoos top office. She stands to make up to $100 million if she can stick it out for at least five years.