Yahoo says to keep a larger stake in Alibaba after IPO

Yahoo Inc will keep a larger stake in Alibaba Group Holding Ltd than originally intended after it goes public, hoping to ride the Chinese e-commerce giant's future growth.

Yahoo said on Tuesday it has agreed to reduce the maximum number of shares in Alibaba that it's required to sell in its IPO, one of the most eagerly anticipated worldwide Internet debuts since Facebook Inc's in 2012.

Founded by billionaire Jack Ma, Alibaba is expected to file for an estimated $15 billion IPO in 2014, valuing the operator of retail, auction and content websites at more thabn $100 billion.

Under the terms of an amended agreement that Yahoo announced alongside its quarterly results, the U.S. Internet company will sell up to 208 million of the 523.6 million shares it owns in Alibaba, either directly back to Alibaba or through the IPO. That's down from a previously agreed maximum of 261.5 million.

After the IPO, Yahoo would then have the right to sell its remaining Alibaba shares at its discretion.

On Tuesday, Yahoo announced second-quarter results from Alibaba, of which it owns 24 percent, underscoring the Internet, retail and content company's sizzling growth.

Alibaba grew revenue 61 percent to $1.74 billion in the April to June period, while net income leapt 159 percent to $707 million. That pace of revenue growth is down from 71 percent in the first quarter, but still exceeded BGC Partners analyst Colin Gillis' forecast for about 54 percent.

(Reporting by Edwin Chan; Editing by Bernard Orr)