Microsoft-Yahoo war may spur Alibaba buyback
Chinese Internet firm Alibaba is set to speed up plans to buy back a near 40 percent stake owned by Yahoo Inc (YHOO.O: Quote, Profile, Research), as Microsoft Corp (MSFT.O: Quote, Profile, Research) threatens to go hostile with a lower bid for Yahoo.
Alibaba, keen to calm Beijing’s fears that Microsoft’s planned $42 billion takeover of Yahoo would increase foreign influence over China’s leading Internet firms, wants to fund a buyback of all or part of the 39 percent stake Yahoo owns, said a person familiar with the Chinese firm’s plans.
Analysts said this could come from a mix of foreign and local financial investors, including Chinese pension funds or state-backed firms looking to enter the Internet sector.
“Jack’s number-one thing is to maintain control,” said Hany Nada, managing partner of Granite Global Ventures, an early institutional investor in Alibaba, referring to the group’s Chief Executive Jack Ma.
Alibaba plans to exercise its ‘right of first offer’ on the stake, which is stated in a 2005 agreement with Yahoo, should the two U.S free credit report without a credit card. firms reach a deal, a source told Reuters earlier.
The ‘right of first offer’ states that Yahoo cannot transfer its Alibaba stake without first offering it to other shareholders. Alibaba believes any change of control at Yahoo, including a deal with Microsoft, would amount to such a transfer, the source said.
LOSING OUT
Alibaba may be unwilling to rule out potential business opportunities with Microsoft, for example in advertising or online trading, that would be lost if it were to buy back its stake from Yahoo.