Fergie's Tech Blog

Yahoo Plans 35% Alibaba Stake

Via Red Herring.

In what will be the largest Internet deal to date involving a non-Chinese player, Yahoo is expected to take a 35 percent stake in Hangzhou, China-based Alibaba for $1 billion in cash, a source close to the deal confirmed Wednesday.

According to the source, Alibaba will gain control of all of Sunnyvale, California-based Yahoo’s mainland China properties, including the Yahoo China portal; Chinese language search engine and keyword network 3721, which Yahoo acquired in 2004; Yahoo’s Yisou Chinese search engine; and 1pai.com, the auction site co-invested by Yahoo and leading Chinese Internet portal Sina.com. 1Pai will be rolled into Taobao, but the fate of Sina's stake in the business is uncertain and will be determined at a later date, said the source.

The same source indicated that there was no time frame for full acquisition of outstanding shares, a statement that would appear to refute reports that have surfaced in the Chinese and U.S. media in recent days. Sina.com reported Wednesday that the two parties have inked a deal for the total acquisition of Alibaba by Yahoo within the next 24 months for an additional $1 billion. And U.S. business cable network CNBC reported that Yahoo will hold an option to increase its stake to 49 percent.

Details of the arrangement are expected to be announced Thursday.

posted by Fergie @ 8/10/2005 10:23:00 AM