It seemed like a long time since we last heard any updates on Alibaba’s never-ending quest to buy back the 40 percent stake of itself held by faded US search company Yahoo (Nasdaq: YHOO), and now we finally know why: apparently the talks broke down a month ago over a number of issues. But in a show of its determination to dump Yahoo once and for all, Alibaba’s CFO has reportedly flown to the US to meet with Yahoo’s CEO to see if a deal can still be worked out. (English article; Chinese article) Alibaba has been very vocal about its desire to buy back the Yahoo stake for the last 2-3 years, especially during the tenure of Yahoo CEO Carol Bartz, who had a stormy relationship with Alibaba founder Jack Ma before she was fired last year for unrelated reasons. Yahoo had indicated it was also willing to sell the stake as it hired a new CEO with a mandate to return the company’s core search business to health. So the talks were progressing with updates appearing in the media regularly until about a month ago when the issue disappeared. I attributed that disappearance to media fatigue, and assumed a deal would be announced whenever both sides finalized the agreement. But now it turns out the 2 sides couldn’t agree on a number of issues, including breakup fees and price. Another sticky issue reportedly was Yahoo’s insistence in structuring the deal in such a way that would allow it to avoid paying taxes on the huge gain in the value of its Alibaba stake, which it paid $1 billion for originally in 2005 but now is likely to be worth more than 10 times that amount. With so many sticking points, I’m not exactly sure how new talks between the 2 sides are likely to produce any real results unless both are willing to make some big compromises. The fact that they are indeed talking again does seem to indicate that perhaps we will see some such compromises, as this issue is one that both companies would clearly like to put behind them. From Yahoo’s perspective, the Alibaba issue remains a major distraction at a time when new CEO Scott Thompson wants to focus on fixing its core search and web portal businesses. For Alibaba, the company wants to find investors who will give its stock the respect it thinks it deserves and provide support and connections in the run-up to a potential IPO for the group that could come as soon as the next 2-3 years. At the end of the day, both companies want to see this issue settled once and for all so they can move on to more important matters. That said, look for each side to make some big compromises in the weeks ahead, with a 50 percent chance they may finally reach a deal by mid-year to bring this long and frustrating saga to an end.
Bottom line: The restarting of collapsed talks between Alibaba and Yahoo indicate both sides are ready to make major compromises in finally bringing an end to their equity relationship.
Related postings 相关文章:
◙ Alibaba Tests Waters for Group Listing 阿里巴巴试水集团整体上市
◙ Alibaba.com Privatization: Parent IPO Coming? 阿里巴巴网私有化：母公司或将上市？
After engaging in a bloody war in the online auctions space 7 years ago that ironically resulted in no winners, leading e-commerce firms Alibaba and eBay (Nasdaq: EBAY) may be gearing up for a second round in this entertaining conflict in the lucrative electronic payments area. That’s the way it looks following the latest disclosure that PayPal, eBay’s highly successful e-payments service, intends to enter China’s fast-growing domestic electronic payments market. (
I’ll close out the week with a couple of Internet items, starting with a tie-up between home electronics retailer GOME (HKEx: 493) and e-commerce specialist Dangdang (NYSE: DANG), both top firms in their spaces, that has the online world buzzing. The other deal involving a small European acquisition by Internet leader Tencent (HKEx: 700) also looks interesting, mostly because it represents one of the company’s first steps into more developed western markets. Let’s start with the GOME-Dangdang deal, which is still unconfirmed but presumably would see the former move most of its online operations onto the latter’s platform. (
The latest wrinkle of the Alibaba saga has just unfolded with the company’s announcement of a plan to take its B2B site Alibaba.com (HKEx: 1688) private at a big premium, in what looks like a step before a potential new multibillion-dollar IPO for the entire group. I’m usually not a big fan of this kind of IPO for a parent company with many different business units, as I think listings of separate units is a more transparent way for people to invest in such companies. But in this case, the fact that all of Alibaba’s different pieces are centered around its core e-commerce business may make such a parent-level IPO a smart move, as this could be a rare case where all the pieces collectively might get a better price than the sum of the individual parts. Let’s backtrack a moment and look at the privatization deal, which has the unlisted parent company, Alibaba Group, offering HK$13.5 per Alibaba.com share, a 46 percent premium over the company’s last closing price, valuing the listed company at about $8.7 billion. (
China’s Internet companies are famous for straying from their core businesses in pursuit of new growth even though such initiatives seldom work, and now e-commerce specialist 360Buy looks set to joint the club with a new travel services initiative. (
