India Internet News
Yahoo And Alibaba Enter Into Partnership For Alipay
02 June 2011
According to the sources, Yahoo Inc has recently solved conflicts with their partner Alibaba Group regarding Chinese company's online payments cost transfer to its CEO Jack Ma.
Yahoo's quarrel with Alibaba, 43 percent owned by the US company, about the Chinese company suddenly transferring Alipay, has beaten Yahoo's shares by about 10 percent since early May.
As per source information, the two companies signed a contract before Yahoo's analyst meeting last Wednesday. However the deal demand the approval of the founder of Softbank Corp and Alibaba board member, Masayoshi Son who has been unwilling to come to the negotiating table. A representative of Softbank confirmed the negotiations were still underway and refused to say further.
Yahoo's share in Alibaba and its 35 percent holding in Yahoo Japan are expected to be a very important assets of US. Internet company. Softbank reserves a major share in Alibaba and also 42 percent of Yahoo Japan.
At 0420 GMT, Yahoo Japan shares went high by 2.4 percent, compared to Softbank which were flat. Moreover, the shares of an Alibaba unit, namely Alibaba.com, reached 0.2 percent high in Hong Kong. Talking about Yahoo shares, Tuesday it was closed with 3.3 percent increase at $16.55 on the Nasdaq.
Yahoo asserts to Alibaba's CEO Jack Ma that they are completely unaware about the last months fact that Alibaba is restructuring Alipay, an online e-commerce website similar to eBay's PayPal. But Alibaba said, in response to this, that Yahoo indeed was knowing about the transaction by virtue of having a board seat now held by earlier Yahoo CEO and director Jerry Yang. However both Alibaba and Yahoo refused to say anything about the agreement. Moreover, according to the source information, Yahoo is inspired with the discussions growth.
Sources confirms the terms of the deal include points discussed during the meeting of Yahoo's analyst held last week. Tim Morse, Yahoo's Chief Financial Officer, stated the company is still discussing with Alibaba and presented a structure of an agreement involving compensation and value of Alipay.
Morse suggests the connection between Alipay and Taobao, the biggest online shopping website in China and an auxiliary of Alibaba and Yahoo Japan, as to that of PayPal and Ebay Inc. The representative informed that the "economic arrangement" must remain concise in order to make value.
The timing and transfer of Alipay is considered to be a small act in a big scenario among Alibaba Group, Softbank and Yahoo, conducted by CEO Carlo Bartz.
Jack Ma of Alibaba cleared that he wanted to lower Yahoo's share holdings in the company, since Softbank and Yahoo, in March, were discussing about Yahoo to leave its Japanese joint venture and transferring it share holdings to Softbank.
Hong Kong based CLSA analyst Elinor Leung told that although the two companies confirmed about Alipay's asset transfer problem, the bad thing running between them is unlikely to change. Her words included, "I don't think it's going to resolve the tensions between Yahoo and Alibaba Group. If they can agree on something right now, the concern (regarding this issue) may become smaller in the future but whether Yahoo's CEO agrees with Alibaba's way of running its business in China are two different things."
As per last week comment made by Yahoo's Morse, Yahoo had made "some nice progress" considering the number of tax-efficient options, such as a traditional spinoff or providing a so-called tracking stock, which would trace the performance of the Japanese unit without conferring ownership.
In an analyst meeting held last week, Yahoo CEO Carol Bartz said, to investors, "We really want to do something with these assets. We're not up here saying 'yeah, yeah, we're talking.'" Yahoo is still thinking on a number of options, including the separation of its complete Asian businesses, along with Alibaba.
According to few investors, those assets could potentially be valued as much as Yahoo's entire market value at present and are betting that an IPO by Alibaba, or one of its auxiliaries, could boost Yahoo's valuation.
Previously, investors have also called for Yahoo to trade off part of its investments and purchase its own shares once again.