Yahoo takes 40 pct stake in China's Alibaba
Thu Aug 11, 2005 10:54 AM BST
By Scott Hillis
BEIJING (Reuters) - Yahoo Inc. (YHOO.O: Quote, Profile, Research) will pay $1 billion (555 million pounds) in cash for 40 percent of China Internet auctioneer Alibaba.com, taking on eBay (EBAY.O: Quote, Profile, Research) and Web search firm Baidu.com (BIDU.O: Quote, Profile, Research) as it extends its reach in the world's second-largest Internet market.
Under the much-anticipated deal, the largest to date for an online asset in China, Yahoo would fold its entire Chinese search and other operations into Alibaba, China's second-largest Internet auctioneer, which runs business-to-business and consumer auction sites.
The deal values the newly merged entity at about $4 billion.
"Yahoo's investment underscores our long-term commitment to the Chinese market," Yahoo Chief Executive Terry Semel said in a statement. "We believe the combination of Yahoo and Alibaba is the best approach for Yahoo to win in this region."
Alibaba chief executive Jack Ma also denied a report in the Chinese media that Yahoo would eventually buy all of his company.
Alibaba's Chief Financial Officer, Joe Tsai, told Reuters his company would eventually like to become publicly traded.
"There's always a view that in the long run we would like to see the company be a public company," he said in a phone interview.
"But in the medium term, our focus is really on building the business...and really executing."
With Internet users expected to hit 120 million by the end of this year, China is the world's second-biggest Internet market after the United States, and Yahoo's search operations are the country's second-largest, after leader Baidu.com.
The deal's structure is similar to the one for Yahoo Japan Corp. (4689.T: Quote, Profile, Research), in which Yahoo holds a 33 percent stake while Japan's Softbank Corp. (9984.T: Quote, Profile, Research) holds a controlling 42 percent.
Softbank is also an investor in Alibaba, and is said to have brokered the current China deal. Continued ...