China's Alibaba Group buys back 20 pc stake from Yahoo
China's largest e-commerce provider Alibaba Group Holding has agreed to repurchase a 20 per cent stake held in the company by Yahoo! for about $7.1 billion.
Under the agreement, Yahoo! is to sell half its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock, it was announced in a joint statement Monday.
At the time of a public listing, Alibaba will have to either buy back a quarter of Yahoo's current stake or let Yahoo sell the shares. The deal has valued Alibaba at about $35 billion.
Alibaba chief executive officer Jack Ma owns about 7.4 per cent of Alibaba Group. According to a Hong Kong stock exchange filing last month, his stake is worth $2.6 billion.
"The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future," Ma said in the statement.
In 2005, Yahoo had acquired a 40 per cent stake in Alibaba in exchange for $1 billion and ownership of Yahoo's Chinese operations.
Alibaba has been pushing to buy back the stake for more than a year and stepped up efforts in September due to improved prospects and expansion beyond China. The deal reduces Yahoo's presence in China, the world's largest internet market.
"As e-commerce in China continues to grow, Alibaba is a very attractive asset," said Duncan Clark, chairman at BDA China in Beijing, which advises technology companies.
"Alibaba is in a better position now to do an IPO. The competitive pressures are increasing, and the need to reward staff and make acquisitions means it's helpful for them to list," Bloomberg quoted him as saying.
Source: The Asia News.Net
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