Yahoo is about to raise approximately $150 million by selling 57.48 million Alibaba.com shares, according to a term sheet obtained by Reuters earlier on Monday. The Internet giant is selling the large chunk of shares at HK$19.80-HK$20.30 each, which represents a 4-6.4% discount to the stock’s closing price of HK$21.15 on Monday and the entire 1.14 percent stake Yahoo held in Alibaba.com, which is China’s largest B2B marketplace.
Yahoo announced a little over 4 years ago that it would purchase a 39% stake in the e-commerce giant’s parent company for US $1 billion – which it will be retaining – plus Yahoo’s Chinese assets (worth about US $700 million). Alibaba in return took charge of Yahoo! China, while Alibaba’s founder Jack Ma remained in charge of Alibaba Group. Yahoo China recently underwent a significant restructuring, during which its popular classified listings service Koubei was taken and moved to Taobao.com.
Partly because of the restructuring, tensions started to lurk between Alibaba Group and Yahoo, and they recently became even more strained when insiders also revealed that Yahoo’s new CEO Carol Bartz was far from being satisfied with the way Alibaba has handled its Chinese portal.
To add fuel to the fire, Alibaba CEO Jack Ma confirmed last weekend at the company’s 10-year anniversary celebration that Alibaba has so far not yet decided if and how to manage the search engine’s algorithm in China after the cooperation agreement between Yahoo and Microsoft, even though the deal was considered to be global. We earlier reported how China could potentially throw a wrench in the Microsoft-Yahoo deal, because of a Chinese law that went into effect in August last year and essentially gives the Chinese government regulatory oversight over any merger that “involve acquisitions of Chinese companies or foreign businesses investing in Chinese companies’ operations.”
Interestingly, Jack Ma also sold 13 million of his shares, or less than 5 percent of his total direct and indirect holding, in Alibaba for about HK$273 million (US $35 million) just last week.
We’re trying to find out more about Yahoo’s plans in China and will update when we do.
Update: a statement from John Spelich, VP of Alibaba Group’s International Corporate Affairs
“We are pleased to learn of the Yahoo! decision because having broader ownership of Alibaba.com with increased liquidity and support among institutional investors is what Alibaba.com hoped to achieve when it released the cornerstone investors.”
We’ve also confirmed with a Alibaba spokesperson that UBS AG will handle the sale of the shares and line up several institutional investors to get the shares sold by tomorrow morning.