Tendersinfo keep you informed about the latest events in the national and international Procurement Industry. Procurement News provides in-depth coverage of the procurement industry, including contract awards, contract additions, new contract wins, mergers and acquisitions. Tendersinfo through its tender news section provides an update on all domestic and global tendering opportunities, invitation to bid & trade leads.
Hong Kong,United States : Yahoo deal heaps pressure on Alibaba
Publish Date : 23-May-2012
Alibaba has finally reached a truce with Yahoo . The Chinese e-commerce giant is offering at least US$7 billion to buy back its own shares from the U.S. internet group, recapturing half the stake Yahoo acquired in 2005 for US$1 billion. The timing is good, since Facebook\'s IPO has left cashed-up investors who could help finance the deal. But a successful outcome will heap pressure on Alibaba.
Yahoo is making some compromises in giving Alibaba what it has long wanted. The new deal will expose it to a hefty tax bill - something it had hoped to avoid. Yahoo will also give up one of the two seats it currently holds on Alibaba Group\'s four member board. Still, the US group will keep some upside from Alibaba shares, by holding on to half of its 40 per cent stake until Alibaba eventually lists its shares.
Alibaba too is taking the rough with the smooth. It has agreed to value itself at a minimum of US$35 billion, compared with the US$32 billion at which it sold shares in 2011. The final price, which will be decided by a sale of Alibaba shares, may be higher. Moreover, it must come up with at least US$6.3 billion in cash in the next six months. That comes just months after it borrowed US$3 billion from a group of six banks to privatise its B-to-B e-commerce portal, Alibaba.com.
Facebook\'s recent initial public offering has probably helped, by creating substantial new wealth among Internet investors. Russia\'s Digital Sky Technologies, which participated in Alibaba\'s last round of fund raising in 2011, is one. It just sold US$1.6 billion worth of shares in the US social media giant. Others who invested in Alibaba in the past, such as Singaporean state investor Temasek, may also be interested.
