Bloomberg News

Alibaba.com Rises After Parent’s Deal With Yahoo, Softbank

August 01, 2011

(Updates with closing share price in second paragraph.)

Aug. 1 (Bloomberg) -- Alibaba.com Ltd. rose the most in seven months in Hong Kong trading after its parent reached a deal with Yahoo! Inc. and Softbank Corp. over compensation for the spinoff of the Alipay payment business.

Alibaba.com rose 6.3 percent, the most since Jan. 3, to HK$11.54 at the 4 p.m. close in Hong Kong. Parent Alibaba Group Holding Ltd. said on July 29 its two biggest shareholders, Yahoo and Softbank, agreed to a compensation deal that may result in Alibaba Group receiving as much as $6 billion from Alipay.

The agreement ended a four-month dispute between Alibaba Group, China’s biggest e-commerce company, and its foreign shareholders over the spinoff of Alipay. The sale of the online payment business to Alibaba Chairman Jack Ma’s private company last year lacked the approval of the board and was only disclosed to investors in March, Yahoo said previously.

Softbank, Japan’s third-biggest mobile carrier, fell 1.7 percent to 2,960 yen at the 3 p.m. close in Tokyo. Yahoo shares declined 3 percent in New York trading on July 29 after the agreement with Alibaba was disclosed.

‘Liquidity Event’

Alibaba Group will get between $2 billion and $6 billion in the case of an initial public offering or “other liquidity event” at Alipay, it said in a July 29 statement. Within the range of the agreement, the amount to be paid to Alibaba in such events will be calculated by multiplying Alipay’s equity value by 37.5 percent.

Before the transfer, Alibaba Group owned 100 percent of Alipay.

Alibaba, based in Hangzhou, eastern China, previously said the transfer of Alipay into Chinese ownership was necessary to facilitate the application of an online payment license in China. Alibaba’s board, comprising members including Yahoo co- founder Jerry Yang and Softbank President Masayoshi Son, had discussed the need to reorganize Alipay for more than three years, Ma said in May.

Alibaba Group owns more than 70 percent of Hong Kong-listed Alibaba.com, a unit that offers business-to-business online commerce services.

--Editors: Garry Smith, Subramaniam Sharma.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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