Alibaba-yahoo deal soon
China’s e-commerce provider near an agreement to buy stake for Us$7bil
NEW YORK: Alibaba Group Holding Ltd is near an agreement to buy back a 20% stake in itself from Yahoo! Inc for about Us$7bil and may announce a deal as soon as today in Asia’s morning, said a person with knowledge of the matter.
The purchase might pave the way for Alibaba, China’s largest e-commerce provider, to pursue an initial public offering (IPO) in the next 18 months, said the person, who asked not to be identified because the matter is private. Alibaba, helped by shareholders Temasek Holdings Pte Ltd, Digital Sky Technologies and Silver Lake, planned to finance the purchase with cash and debt, the person said.
Alibaba has been trying to buy back the stake in itself for more than a year and stepped up efforts in September, when the US company fired former chief executive officer Carol Bartz.
Reducing the Alibaba stake lessened Yahoo’s toehold in China, the world’s largest Internet market, while also making a takeover of the US company more likely, said Jordan Rohan, an analyst at Stifel Nicolaus & Co.
“For Yahoo shareholders, the sale and subsequent march towards an IPO is a clear positive, as many questioned whether Yahoo would be able to monetise its China assets at all,” Rohan said in a research report. “In addition, the capital required to take Yahoo private is reduced with each Alibaba monetisation event.”
Yahoo had come close to selling the stake in the past and failed, and a deal might be postponed, the person said. Yahoo currently owns a 40% stake in Alibaba, so the current proposal under discussion would cut that holding in half.
The companies struggled to make headway on negotiations under Bartz, who failed to reach an agreement to let Alibaba Group buy back shares in 2010. Yahoo acquired the stake in 2005 in exchange for Us$1bil and ownership of Yahoo’s Chinese unit.
Meanwhile, Google Inc has won approval from Chinese regulators for its Us$12.5bil purchase of Motorola Mobility Holdings Inc, clearing a final hurdle for a deal that boosts its patents portfolio and steps up competition with Apple Inc.
“We are pleased the deal has received approval in all jurisdictions,” Motorola Mobility said in an e-mailed statement on Saturday, confirming that the transaction has been approved in China. “We expect to close imminently.”
The deal helps Larry Page, the Google co-founder who took over as chief executive officer last year, push the web company to better compete with Apple’s iphone and gain more clout for its Android software as it expands in the hardware business. It also gives Google, the worlds’ biggest maker of smartphone software, a trove of 17,000 patents to protect Android devices in legal disputes with competitors. The acquisition, announced last year, had already received approvals in Europe, the United States and other jurisdictions worldwide. Libertyville, Illinois-based Motorola Mobility had said in a regulatory filing in February that only Chinese clearance was still required.
“Our stance since we agreed to acquire Motorola has not changed and we look forward to closing the deal,” Mountain View, Californiabased Google said in an e-mailed statement. The company also confirmed it had received word from Chinese authorities of the purchase being approved.