It's just got a lot better for Alibaba's chairman
Jack Ma Yun, the chairman and chief executive of Alibaba Group, is getting a freer rein to chart the course of developing the e-commerce empire he co-founded in 1999 after scooping a pair of major deals this week.
Alibaba's proposal to privatise its Hong Kong-listed subsidiary Alibaba.com, the world's largest business-to-business e-commerce services provider, was overwhelmingly approved yesterday at a special shareholders meeting.
That followed an agreement hammered out between Alibaba and Yahoo on Monday for the Chinese company to buy in stages the 40 per cent stake in Alibaba owned by Yahoo, the struggling internet search pioneer. Their deal also offered incentives for Alibaba to consider an initial public offering by late 2015.
Qi Jianzhe, an analyst at mainland internet market research firm Analysys International, said: 'These are positive factors that will help the Alibaba Group obtain ideal market value in the future.'
At the meeting yesterday, 95.5 per cent of the outstanding Alibaba.com shares were voted in favour of taking the subsidiary private, after a run of less than five years as a public company. It listed in Hong Kong in November 2007.
The next step for Alibaba.com is to seek approval of the privatisation plan from the Grand Court of the Cayman Islands at a petition hearing on June 15. Both Alibaba and its subsidiary were incorporated in the Cayman Islands. Once the move is sanctioned by that court, Alibaba.com's listing will be withdrawn on June 20.
In February, Alibaba, which is based in Hangzhou, offered to purchase in cash the 27 per cent minority shares in Alibaba.com that it did not own for HK$13.50 a share, equal to as much as HK$19.6 billion. That offer implied a 60.4 per cent premium over the 60-day average closing price of Alibaba.com shares and a 55.3 per cent premium over the 10-day average closing price before the offer was made. Alibaba, which also runs the Taobao online shopping platforms, will fund the privatisation with a combination of new committed financing and cash on hand.
In an internal e-mail sent to the group's 25,000 employees worldwide on February 22, the same day Alibaba's privatisation plan was announced, Ma said: 'Some people suggested that we buy back the shares at a lower price, but this is not how Alibaba operates.'
Ma said the business model of Ali baba.com, which has operations in 240 markets and has 79.8 million registered users, faced 'enormous challenges' because of the sluggish domestic and international economic environment. Alibaba.com's 'transformation and upgrading needs to be accelerated', which would not be possible 'given the structural limitations of listed companies', he said.
The online trading giant last month reported a 25 per cent drop in first-quarter net profit to 339.2 million yuan (HK$415.4 million) from 452.5 million yuan a year earlier.
