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| In the land of the dragon |
Shanghai, Aug. 10 (Reuters): Yahoo Inc is close to paying $1 billion and forking over its China operations for a 35 per cent stake of China’s second-largest e-commerce operator, Alibaba.com, a source close to the discussions said on Wednesday.
The deal is in the final hours of discussions, the source said, speaking on condition of anonymity.
Alibaba has called for a news briefing on Thursday, sources said.
The combination would create an e-commerce giant by bringing together Alibaba’s business-to-business and consumer online auction sites with Yahoo’s search operations, China’s second largest after leader Baidu.com.
Yahoo’s shares have risen 1.6 per cent this week since the news first emerged, compared with a small drop for the broader tech-heavy Nasdaq Baidu shares quadrupled in their US debut on Friday, but fell 17 per cent on Tuesday.
A spokesman from Alibaba and a spokeswoman from Yahoo both had no comment.
Yahoo would swap its country operations in exchange for a structure more similar to Yahoo Japan Corp, in which the US search giant holds a 33 per cent stake while Japan’s Softbank holds a controlling 42 per cent.
Softbank is also an investor in Alibaba, and is said to have been a broker in the current China talks, according to previous media reports.
An analyst at a major western brokerage, speaking on condition of anonymity, said Yahoo’s ultimate aim may be to buy all of Alibaba ? an option that has been mentioned as part of an overall deal in the Chinese media.
“It’s unclear if Yahoo’s comfortable owning one-third forever, or whether Yahoo has a path to control,” said an analyst at a western brokerage.
Citing Yahoo Japan as a precedent for the move, the analyst said Yahoo was positioning itself to take a dominant role in China.
Based in Hangzhou ? about two hours from Shanghai ? Alibaba’s main China operations include a business-to-business e-commerce site, an online auction site called TaoBao that competes with eBay in China, and a recently launched online payment system called Alipay.
