GM Folks. Alibaba Rubbing Lamps To Buy Back Yahoo! Stake
Vivian Wai-yin Kwok, 03.19.08, 7:51 AM ET
HONG KONG -
Like the legendary Arabian character Ali Baba, Jack Ma, founder of ’s biggest business portal, Alibaba.com, treasures freedom over gold bars. To avoid Microsoft's capture of Yahoo!'s minority stake in Alibaba.com, Ma is reportedly seeking investors to back him to regain control of those shares.
The share acquisition plan, together with its forecast-beating 2007 results, sent the shares of Alibaba.com up 13.6%, or 1.66 Hong Kong dollars (21 cents), to close at 13.86 Hong Kong dollars ($1.78), on Wednesday. The stock had risen as much as 19.3%, to 14.56 Hong Kong dollars ($1.87), during the day.
Ma and his management team are reportedly in advanced talks with investors to finance their plan to purchase the 39% of Alibaba.com owned by Yahoo!, which is facing a $44.6 billion hostile takeover bid by Microsoft, announced Feb. 1. Alibaba was reportedly given a "right of first offer" to buy Yahoo!'s stake, according to its agreement with Yahoo! inked in 2005.
Although Yahoo! has been Alibaba.com's largest shareholder since purchasing its stake in the fall of 2005 for about $1 billion, Ma, an English teacher turned entrepreneur, has been careful to keep a free hand to manage and expand the Hangzhou-based e-commerce portal, a venture he founded in 1999.
Ma and other Alibaba executives are said to be concerned that Microsoft, which has history of hands-on management, would intervene in Alibaba's day-to-day operations. To ensure management independence, Alibaba has hired Deutsche Bank as financial adviser and Wachtell, Lipton, Rosen & Katz as legal adviser to work on the purchase, The Wall Street Journal reported Wednesday, citing unnamed sources with knowledge of the situation.
All parties involved declined to comment on the news.
Alibaba said Tuesday that its net profit in 2007 had ballooned 3.4 times, to 967.8 million yuan ($136.3 million), as a result of growing paid-up membership, as well as higher average spending per member.
Alibaba, which is currently worth about 70 billion Hong Kong dollars ($9 billion) in market capitalization, tapped $1.5 billion in cash from its listing last November in Hong Kong, making it the largest tech stock IPO after the debut of Google in 2004. The business-to-business portal, which surged 192% on the first day of trading, failed to sustain its magic, though. The stock slid to 16.34 Hong Kong dollars ($2.09) last week, from its peak of 40.50 Hong Kong dollars ($5.19), and declined still further prior to Wednesday's news.
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