Internet sensation Alibaba is cobbling together an estimated US$8 billion in cash to buy back a 20% stake in the business from Yahoo.
In an uneasy marriage, Yahoo has been the uncomfortable owner of 40% of Alibaba, as the suitors have had a series of public rows about domestic arrangements over the years.
At one stage, Alibaba threatened a hostile reverse takeover of Yahoo.
Yahoo swooped on Alibaba for $1 billion and will make a handsome return on a stake now valued at around $17 billion.
Alibaba is the global business face of thousands of Chinese manufacturers and wholesalers online. Growth has been phenomenal – from £43 million in the year before Yahoo chipped in as an investor in 2005 to £1.1 billion in the first half of 2012 – up 60% on the previous 12 months.
What’s more, Alibaba is on track to buy the other 20% share back later this year.
Joseph Tsai, Alibaba’s chief financial officer, has led the company’s fund-raising, has tried to contain details of the company’s finances to a small coterie of investors.
The numbers that got out are are mind-boggling – Alibaba may be the junior partner, but has the same market capitalisation of $45 billion that Microsoft offered to buy out Yahoo in a rebuffed takeover in 2008.
Alibaba is now reckoned to be the world’s most valuable internet company – that’s ahead of Google, Facebook, Twitter and all the other whizz kids out there.
Yahoo shares slipped back nearly 1% to close at $15.98 per share on news of the deal, although other housekeeping contributed to the drop as Google’s Marissa mayer moved in to sit behind the desk of executive Ross Levinsohn.
Levinsohn, who signed off on the alibaba purchase for Yahoo, left in disgrace after someone disclosed he had lied on his CV.
