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    Greater China
     Aug 12, 2005
Yahoo! buys 40% stake in Alibaba.com

BEIJING - US Internet giant Yahoo! has spent US$1 billion in cash to acquire a 40% stake in the Chinese e-commerce company Alibaba.com. The acquisition could alter the e-commerce market drastically.

Negotiations between the two companies were finalized Wednesday. The focus was on details like contract conditions and prices.

Alibaba, which runs the business-to-business (B2B) website Alibaba.com and the customer-to-customer (C2C) website Taobao.com, claims it is the biggest B2B website in the world and Taobao is the biggest C2C site in Asia. Taobao competes fiercely with eBay in China and the deal was considered by some a "knockout blow for eBay" in the country.

Jim Sun, an Internet analyst with the London-headquartered Evolution Securities, believed the deal would have a big impact on China's Internet industry, especially in the online auction market where eBay and Taobao dominate.

Yahoo! China is expected to see its president Zhou Hongyi leave the post at the end of this month. He founded the keyword search company 3721 and led Yahoo! China to increase revenue. If he does leave, Yahoo! will have to find a key person to take over in China.

Alibaba, founded by a former English teacher Jack Ma, is expected to greatly elevate Yahoo! China's position in China's e-commerce market, although Yahoo! already has a C2C joint venture with the biggest Chinese Internet portal Sina Corp, which lags behind eBay and Taobao. The Chinese firm may choose to reward its founders and investors with the sale of some stock. There is speculation it may be listed overseas. The US$1 billion price for a 35% stake puts the company's value at almostUS$3 billion, a price which Alibaba may not even get from a public listing, according to Sun.

(Asia Pulse/XIC)

 

 
 



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