December 9, 2011
Alibaba Seeks $4B Debt-Financing As Rumors Of Yahoo Buy-Out Resurface
Global markets are abuzz as reports emerged Thursday that the Chinese e-commerce titan the Alibaba Group will try to finance as much as $4 billion of debt in an attempt to buy back Yahoo´s 40 percent stake in their company. According to estimates, that stake will likely be between $9 and $13.5 billion.
Alibaba CEO and former English teacher Jack Ma has frequently expressed his intention to buy out Yahoo´s shares in his company–an ambition that insiders say served as a significant point of controversy between Ma and former Yahoo CEO Carol Bartz.
The long-standing Alibaba-Yahoo family feud has found itself in the financial world´s spotlight recently as rumors of a Yahoo take-over have resurfaced.
Inside sources also say that Ma has been in talks with The Blackstone Group and Bain Capital in efforts to form a financial partnership strong enough to launch an all-out $25 billion bid to take over Yahoo. If they manage to pull it off, analysts speculate that Alibaba and Softbank would take over Yahoo´s stakes in Alibaba and Yahoo Japan while the two American equity firms would divvy up its domestic holdings.
Serving in an advisory capacity to Alibaba, the multinational Rothschild Group has reportedly distributed term sheets to various banks asking for underwritten proposals for financing the Chinese company´s liabilities. While reporters have been unable to procure copies of the sheets, the fixed term on the debt is expected to be about 3 years.
Alibaba has purportedly asked banks to underwrite debt obligations of some $1 billion with an expected total hold of roughly $400 million.
Mr. Ma has as yet declined to comment on these reports.
An anonymous insider warned the financial community Thursday not to jump to any conclusions, telling reporters that no concrete decisions have yet been made and that the tenuous partnership between the various financial institutions involved is by no means stable, nor are they unanimous as to how to move forward.
Last month, China´s only final equity firm Yunfeng Capital–co-founded by Mr. Ma–teamed up with a group of investors to buy a 5% or $1.6 billion stake in Alibaba Group.
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