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.
u’o…desperate move?
Doubtful Yahoo will have the ambition for attempting much in China. Sounds like a fairy-tail partnership compared to other horror stories… e.g. Danone
I thought that said “$150 million worth of Alabama” which would be funnier.
It looks like another case of not understanding how to do business in Asia. Next you’ll see Yahoo being shutoff from the Chinese consumer.
I was struggling to find something to say about this post, so i put my macro boots on and made a few connections…
…At the moment in America the debate is about Healthcare.
The people making all the money say that by introducing a new system, which is not based on people suffering, fear and great profit, Jehovah will come down and bus a cap in your (innovative) ass and you will keep dying at about the same time as everyone else, as you do already, but hey lets not get caught up in the detail.
Then it occurred to me. The same people (typologies are in effect here), i mean the right wing classical economist led capatalists…
YOU (LOL, not really but notice how that word is used often when you are being manipulated by someone).
…who do deals with China everyday (you know that progressive socialist power elite of peace loving monks)…
…who are effecting your country’s ability to grow its lower to middle class wealth tiers (ie: the people who buy all the dumbass products that keep the economy going – these are really quite innocent and beautiful people btw)…
…who are the ones saying socialist systems fail (yeah, right?! as if one has ever been practiced) then shake hands on it with, you guessed it.
Then i thought, oh sh*t, i’m probably sounding preachy and stereotyping, and this is a tech blog, and you guys know this already cos your pretty savvy and now i’ve alienated myself from you, a nice Chinese monk, somebody with very white teeth and great healthcare, yahoo, and this is gonna be listed under my name but then i thought
…humor is important for your soul, so enjoy!
I don’t understand the first part of the article (maybe it’s too early). So yahoo owns 1.14% and is selling all of its ownership of Alibaba? Or Yahoo owns 39%?
Sorry for my ignorance.
http://www.trad...spx?symbol=yhoo
yahoo owns 1% of the Alibaba.com float (tradeable shares) directly. They own 44% of Alibaba GROUP, a holding company which owns 74% of Alibaba.COM and also owns TaoBao, so indirectly they still own about 33% of Alibaba.com via their stake in Alibaba Group.
Alibaba is a site full of Chinese scammers. I has no future.
I suspect Yahoo’s decision was a political decision – not a financial decision. Alibaba has grown too large and influential in China to have Yahoo (a US company) owning such a large stake in it. Government relations concerns are probably driving this more than anything.
I suspect that this is just a small announcement compared to the one to come – Yahoo selling a significant portion (if not all) of its stake in Alibaba and perhaps shutting down the Yahoo portal in China.
I never figured Alibaba as such a useful tool – spent a fair while dealing with Chinese companies working on importing to the UK, and my experience of Alibaba was that it was full of chancers. Amazing to think that its become the valuable beast it has.