Yahoo, Alibaba Dance Nears Finale　　雅虎应与阿里巴巴撇清干系

By newsdoug on December 23, 2011

Yahoo aims for clean slate with Asia asset sale I normally don’t like to write about the same deal twice in one week, but in this case things suddenly seem to be moving quickly in the story of faded Internet giant Yahoo (Nasdaq: YHOO), which may soon dispose of some or all of its 40 percent stake in Chinese e-commerce leader Alibaba as well as its holdings in Yahoo Japan (Tokyo: 4689). Reports in the foreign media are slightly conflicting, but what’s clear is that the Yahoo board was set to meet on Thursday to discuss a plan that would see it sell either 25 percent of its stake in Alibaba, or perhaps the entire 40 percent stake, under a deal that would be worth around $17 billion. (English article) I had written earlier in the week on other reports that said Alibaba was working with partners to lead a group that would buy out Yahoo entirely (previous post), in a deal that might value Alibaba at around $20 billion. But the latest reports indicate that the Yahoo board would prefer to sell off its valuable Asian assets rather than be acquired outright, and appears to be moving quickly in that direction with the Thursday board meeting. This kind of strategy looks good, as it would allow Yahoo to quickly raise some big cash and also to get rid of a major distraction from these Asian assets as it hires a new chief executive to turn itself around following the recent departure of controversial CEO Carol Bartz. I’m a bit puzzled about why Yahoo might want to hold on to some of its Alibaba stake, as at least one of the reports said the company would still like to keep 15 percent of the Chinese e-commerce giant. In my view, this asset, which Yahoo purchased for around $1 billion in 2005 and which could now be worth about $8 billion, was very successful from an investment perspective but disastrous from a strategic one. A personality clash between Bartz and Ma was largely to blame for the bad relations between the 2 companies, and perhaps Yahoo’s board feels the relationship could be salvaged under a new CEO. But in my view, Jack Ma is a brilliant but very opinionated leader head who is unlikely to listen to anyone whose views differ from his own, and Yahoo would be well advised to completely sell its Alibaba stake, as any attempts at future strategic initiatives between the two sides would most likely end as major disappointments.

Bottom line: Yahoo is on the cusp of selling off its distracting stakes in Alibaba and Yahoo Japan, and should sell off all of its Alibaba holdings to focus on reviving its core search business.

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