Alibaba-Yahoo Buyout: Back to Square One 阿里巴巴股权回购重回起点

By newsdoug on May 14, 2012

New Yahoo turmoil to delay Alibaba buyback again When the history books are finally written, the ongoing divorce between e-commerce leader Alibaba and its controlling stakeholder Yahoo (Nasdaq: YHOO) could well go down as one of the longest in corporate history. But unlike the case with most divorces where messy issues like who gets to keep what assets complicates the matter, this case will see Yahoo taking most of the blame for the protracted delays, which have been extended yet again with the sudden resignation of Scott Thompson just a half year after he took over as CEO of the tarnished US Internet giant. (English article) For those who haven’t followed this story too closely, Thompson has been the subject of a tempest-in-a-teapot scandal over the last couple of weeks after a dissident Yahoo shareholder discovered the new CEO had made misstated part of his degree on his resume, claiming a double degree when in fact he only had a single one. Perhaps I’m being too harsh in calling this scandal a tempest in a teapot, as clearly it’s improper to exaggerate on one’s resume. At a more fundamental level, this gaff does seem to highlight the dysfunctionality that seems to be all too common at Yahoo these days, which brings me back to the original point of this posting, namely that this latest development will deal yet another major setback to Yahoo’s long and tortured talks to sell back some or all of the 40 percent stake it owns in Alibaba. To recap briefly, the pair were all smiles when they first announced their union in 2005, with Yahoo buying its 40 percent of Alibaba — now worth more than $10 billion — for just $1 billion. The honeymoon didn’t last for very long, and relations soured considerably under the brief tenure as CEO of Carol Bartz, who repeatedly clashed with Alibaba founder Jack Ma before her abrupt firing last September. (previous post) With Bartz out of the picture, Yahoo started to negotiate a sale of the stake back to Alibaba last fall, but unreasonable expectations by both sides, combined with a lack of leadership at Yahoo later caused those talks to collapse. After Thompson’s hiring, both sides returned to the bargaining table earlier this year, and foreign media were reporting as recently as a week ago that a deal might be just weeks away that would see Yahoo sell 15-25 percent of its stake back to Alibaba. I suspect that Thompson was a major driver of that deal, as he was clearly in control and keen to resolve that issue so he could focus on his much bigger task of returning Yahoo to health. If that was the case, that means that Thompson’s resignation, which has also thrown Yahoo’s board into turmoil, could easily mean the deal being negotiated will now be scrapped. What’s more, the board, which has named an acting CEO, is likely to take at least another couple of months to name a new long-term chief executive, who will then need to get acquainted with the company before relaunching any buyback talks. At this rate, I seriously doubt the 2 sides will be able to reach a deal this year, and the earliest we could see an end to this troubled marriage would be in the first half of 2013.

Bottom line: The sudden resignation of Yahoo’s new CEO will further delay its ongoing divorce with Alibaba, with a deal unlikely until the first half of 2013 at the earliest.

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