Alibaba in talks on buyout of yahoo

PUBLISHED : Friday, 21 October, 2011, 12:00am
UPDATED : Friday, 21 October, 2011, 12:00am


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Mainland e-commerce giant Alibaba Group will begin talks with various private equity firms about acquiring Yahoo, in a move that could force the hand of the United States internet firm to make a deal happen.

Chairman Jack Ma Yun said financing any deal to buy the whole or part of Yahoo would not be a problem, but the US company's management has not said 'exactly what they want to do'.

'There are so many PEs (private equity firms) talking to us and we will start to talk to them in the next few weeks,' Ma said yesterday at the AsiaD conference in Hong Kong.

Over the past few weeks, private equity firms including Bain Capital, Silver Lake, Providence Equity Partners and Hellman & Friedman had stepped up efforts to partner among themselves or with potential strategic buyers, such as Alibaba or Microsoft Corp, Reuters said.

But Yahoo advisers Goldman Sachs and Allen & Co told interested parties this week of a so-called 'no cross talk' provision, which is part of a non-disclosure agreement that they have to sign to gain access to sensitive financial information about the company, Reuters said, citing several persons close to the situation.

Earlier at the conference hosted by online publisher All Things Digital, Yahoo co-founder Jerry Yang said the company's intention was not to put itself up for sale.

'The intent is to look at all options,' Yang said. 'There's plenty of options for the board, and plenty of options for our shareholders to realise value.'

Yahoo, which has a market capitalisation of US$20.13 billion, owns about 39 per cent of Alibaba.

The Hangzhou-based company has more than 23,000 employees in China, India, Japan, South Korea, Britain and the US. Its operations include mainland online shopping market leader Taobao Mall, China Yahoo and Hong Kong-listed

Asked on reports that no deal to buy Yahoo will push through without Alibaba being involved, Ma's response oozed sarcasm. 'Oh, I didn't know we were that important.'

On a serious note, he said Alibaba could either be 'the main driving force' on a Yahoo buyout or pursue as a partner with other parties.

'We believe in ourselves,' he said. 'First, we are ready. Second, we also have options. And third, we are eagerly waiting for answers. They have to make a decision.'

In May last year, Alibaba submitted to Yahoo a proposal to buy back part of its shares in the mainland company. Yahoo countered with a proposal that Alibaba found unacceptable.

According to a Forbes report, Yahoo had also rejected a US$3.5 billion offer made earlier this year by an investment group led by Ma to acquire a 15 per cent stake in the US company.

Asked about a widely reported comment earlier this month that he has lined up US$20 billion to buy Yahoo, Ma said: 'I absolutely don't have US$20 billion.

'We never think finance is a problem, the money is there. The problem is what Yahoo wants to do.'

Liu Guanwu of EnfoCapital, part of mainland market research firm Analysys International, said 'local private equity funds or even China's sovereign wealth funds will assist Ma' to buy out Yahoo's stake in Alibaba.

Ma said 'time is so precious', hinting that the current interest in Yahoo could quickly disappear.

Earlier this week, Microsoft chief executive Steve Ballmer said the firm was fortunate that its U$44 billion bid to buy Yahoo - once the world's top net search provider - in 2008 failed.