Yahoo and Alibaba Agree on Alipay
A dispute between Yahoo Inc. and Alibaba Group over the transfer of the latter’s Alipay, its online payment system, to CEO Jack Ma has been resolved.
A source said that before the meeting of Yahoo analysts last Wednesday, the two powerful companies have come up with an agreement. There wasn’t any immediate clarity to the proposed terms of compensation of Yahoo for Alipay’s transfer. The deal must have the consent of Masayoshi Son, founder of Softbank Corp. and a member of the board of directors of Alibaba. Son was reportedly not willing to do any agreement earlier.
The deal was reached after a heated contradictory stand rose between Alibaba and Yahoo over the disclosure’s timing. According to Yahoo, the deal had blindsided them while Alibaba claimed that they informed Yahoo about the transaction through Yahoo’s CEO Jerry Young, who takes a board seat at Alibaba.
There was no comment given on both sides. Neither Softbank was available to give immediate comment.
According to a source with knowledge about the matter, Yahoo gets positive consideration as it sees the progress of the deal.
The 43% ownership stake of Yahoo in Alibaba has been a main draw for capitalists who are anxious to indirectly invest in China, the biggest internet market in the world, through a firm based in the U.S.
The revelation of Yahoo of the said transfer of Alipay to a new entity controlled by Ma lowers its shares. They have dropped over 6% in the previous months. The company’s share obtained a late rise on Tuesday by more than 3% prior to the close of trading.
Due to existing laws in China to mandate local ownership of online payment services, there was immediate need to restructure Alipay. Last week, Alibaba made an announcement that Alipay is one of the companies in China that were licensed by the People’s Bank of China to operate a payment business.
Meanwhile, Ma stressed his plan to cut the stake of Yahoo with Alibaba while Yahoo and Softbank were in discussions last March over the transfer of Yahoo’s Japanese joint venture to Softbank.
Tim Morse, chief financial officer of Yahoo, emphasized last week the capability of Yahoo to make some progress in considering tax-efficient options that include a conventional spinoff or the issue of a tracking stock, which tracks Japanese unit performance without the need to counterfeit ownership.
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