Yahoo will pay $1.4bn for stake in China's Alibaba.com

Rumoured deal is confirmed

Yahoo plans to take a significant stake in China's Alibaba.com as part of a strategic partnership between the two companies, a company official said yesterday in Beijing.

As part of the deal, Yahoo will pay US$1 billion (NZ$1.4 billion) in cash for a 40% stake in its Chinese partner. In addition, Yahoo will transfer all of its Chinese businesses, which will continue to operate under the Yahoo brand, to Alibaba.

"This is Yahoo getting much bigger in China," said Daniel Rosensweig, the company's chief operating officer, at a press conference in Beijing.

Based in Hangzhou, in eastern China, privately-owned Alibaba operates the Alibaba.com online marketplace and the Taobao.com auction website, which competes with eBay's China auction site.

The deal gives Yahoo a 40% stake in the Chinese internet company and 35% of its voting shares.

The agreement makes Yahoo the largest outside investor in Alibaba, the companies say. Previously, the largest investor in Alibaba had been Japan's Softbank.

Yahoo has struggled to establish a leading presence in China, where its best efforts have been unable to match the success of top Chinese portal operators such as Sina and Netease.com. At the same time, many of Yahoo biggest competitors from overseas, such as eBay and Google, have stepped up their investments in China during recent years.

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