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Restructuring

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Alibaba bids to take e-commerce unit private

by Andrew Bulkeley  |  Published February 22, 2012 at 1:22 PM
AlibabaDOTcom227x128.jpgChinese Internet company Alibaba Group Holding Ltd. on Tuesday offered to buy out minority shareholders of its listed Alibaba.com Ltd. business-to-business unit as it hammers out a restructuring on its way to its own initial public offering.

Alibaba Group said it would pay HK$13.50 ($1.74) per share, a 45.9% premium to the stock's close Feb. 8 before trading was halted amid rumors of an impending announcement. If the parent mops up the entire 27% of Alibaba.com outstanding, it will have to pay HK$19.6 billion.

"Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company," said founder and Alibaba Group CEO Jack Ma in a statement.

Alibaba is reeling from a scandal after it awarded the equivalent of trusted partner status to thousands of wholesalers who then defrauded corporate Alibaba members, sparking a group defection. The offer as well as a widely reported $3 billion loan have now put the focus on the company's talks to buy back a 40% Alibaba Group stake from troubled Internet company Yahoo! Inc., of Sunnyvale, Calif. In addition to getting back on track, Alibaba Group is also slowly preparing for an IPO that Alibaba CFO Maggie Wu said during a conference call is "several years away."

Although it provides a bonus for current Alibaba.com investors, the offer at HK$13.50 actually comes at the same price as the company's 2007 IPO -- at the time the biggest Internet listing since Google Inc. went public in 2004. However, Alibaba hinted that the stock has actually held its own as Hong Kong's Hang Seng index has fallen more than 27% since the sale.

New Yahoo! CEO Scott Thompson is in talks to sell the company's Asian assets, which are valued at $17 billion and include the Alibaba stake as well as an investment in Yahoo! Japan. Thompson is trying to catch up to Google and other rivals even as he faces a power struggle in Yahoo!'s boardroom. On Feb. 15, Daniel Loeb, the founder and CEO of Third Point LLC, which owns 5.6% of Yahoo!, unveiled plans to nominate a slate of directors for Yahoo!'s board.

Rothschild, Credit Suisse Group and Deutsche Bank AG are advising Alibaba Group. HSBC Bank plc handles financial details for Alibaba.com, which is taking legal counsel from a Slaughter and May team led by Hong Kong partner Benita Yu and including Clara Choi and Kevin Ip. Somerley Ltd. is advising Alibaba.com's board.
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Tags: Alibaba Group Holding Ltd. | Alibaba.com Ltd. | China | Internet
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Andrew Bulkeley

Correspondent, Berlin

Andrew Bulkeley has been the Berlin-based European correspondent for The Deal for nearly a decade. Andrew has covered some of Europe's biggest deals, including the marriage and divorce of Daimler and Chrysler, Vodafone's record acquisition of Mannesmann, and the turbulent non-sale of General Motor's Opel. Contact



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