Friday, February 10, 2012

Alibaba Group may take B2B division private as part of Yahoo deal

News this week: According to Reuters, the Alibaba Group is planning to privatise its Hong Kong-listed B2B subsidiary, The Chinese e-commerce giant is in the process of securing a loan worth US$3 billion from six major banks. Alibaba will use a combination of loaned and internal cash as well as an asset swap to buy back a portion of the 40% stake owned by majority shareholder, Yahoo Inc.

The loan from the six banks involved, namely, Australia and New Zealand Banking Group, Credit Suisse Group, DBS Bank, Deutsche Bank, HSBC Holdings and Mizuho Financial Group, have a reported tenor of three years with approximately a 4% yield. was suspended from trading on the Hong Kong Stock Exchange (HKEx) yesterday at the request of the company citing “a transaction involving the controlling shareholder of the Company” as the reason. Yahoo’s stake in the Alibaba Group is estimated at around US$14 billion. Alibaba is reportedly aiming to buy back 25% of Yahoo’s overall stake. Alibaba will use a stake in to cover a third of the deal value and the rest through loaned cash.

Separately, Yahoo announced this week its non-executive chairman, Roy Bostock, and three other board members would step down later this year. The company hired former PayPal president, Scott Thompson, to replace Carol Bartz in January this year. was founded in 1999 and has been listed on HKEx since November 2007. The company is approximately 73% owned by parent company Alibaba Group and has a market value close to US$6 billion.

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