China's Alibaba Wants Yahoo Stake Back - InformationWeek

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China's Alibaba Wants Yahoo Stake Back

The e-commerce leader is seeking to repurchase Yahoo's 40% ownership in the company and list it on China's stock exchange.

Top management of Alibaba Group, China's largest e-commerce platform, said the company wants to buy back its entire stake in the company -- partly held by Yahoo -- and list the online commerce company on a mainland China stock exchange.

The Alibaba Group is a China-based family of Internet businesses that includes the publicly traded Alibaba.com and Taobao -- the eBay of China. Yahoo owns close to a 40% stake in the group.

At the company's annual shareholders meeting held in Shenzhen, China, CFO Joe Tsai said Alibaba would like to buy back Yahoo's stake. But the U.S. Internet giant has not expressed any interest in selling.

Yahoo acquired the stake in 2005 by paying $1 billion and relegating its China operations to Alibaba. But over the following five years, the companies' relationship has been anywhere from rocky to downright ugly.

Shortly after taking over in January 2009, Yahoo CEO Carol Bartz told Alibaba management she wasn't happy with the way it was running Yahoo China. The latest fallout between the companies came toward the beginning of Google's hacking confrontation with Beijing, with Yahoo responding it was "aligned with Google." Alibaba representative John Spelich responded by saying that "Yahoo's statement was reckless... given the lack of facts in evidence."

Nevertheless, Bartz has been happy with the return on the investment. At Yahoo's annual shareholders meeting last week in San Francisco she called it a good way to invest in China without becoming embroiled in the country's politics.

"We are very aware that a great amount of our value to our shareholders is Alibaba and Yahoo Japan," Bartz said.

Alibaba also got a scare in 2008 when Microsoft made an unsolicited bid to purchase Yahoo. Microsoft's massive size and hands-on approach worried Alibaba.

To further assert its Chinese identity, the Alibaba Group said it would like to list Alibaba.com in mainland China. It now trades on the Hong Kong stock exchange. "When Alibaba was listed in 2007, we thought about how to let mainland investors purchase our shares because they're the ones who understand Alibaba best. If we were to gain legal approval, we would begin planning to return to A shares," CEO David Wei said.

A shares are shares that are traded in Chinese yuan on either the Shanghai or Shenzhen stock exchange.

Beijing has stated it will allow foreign companies and domestic firms registered elsewhere to list their shares in the mainland. Alibaba.com is registered in the Cayman Islands.

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