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Yahoo Japan In Talks For Change Of Ownership

March 2, 2011

Yahoo announced in December that it was cutting about 600 jobs in its third wave of layoffs since late 2008 as chief executive Carol Bartz oversees a reorganization for the internet pioneer. Following the layoffs, Yahoo Inc. has been in talks to potentially unload its $7 billion stake in Yahoo Japan, an AFP report said on Wednesday, citing a source close to the matter.

Negotiations, however, are still in early stages and nothing is near to completion, according to the Wall Street Journal.

Yahoo owns a 30 percent stake in its Japanese namesake. Japan’s Softbank holds 41.9 percent and is the largest shareholder in the Japanese firm which denied earlier reports that it was in talks with Yahoo to also buy the US firm’s stake.

Yahoo executives have in recent weeks said they are examining its stake in the Japanese firm which holds a 50 percent share in internet search in the Japanese market, compared with around 30 percent for its primary rival Google. Yahoo Japan, announced last year, it was choosing Google’s search technology to power its search engine and adopting its advertising and distribution system but would maintain its current user interface.

The go-ahead to the search alliance was green-lighted in December after complaints from Microsoft and Japan’s top e-retailer Rakuten that the partnership would give Google near-total control over the Japanese web search market, AFP reports.

Yahoo is likely to turn its attention to China if an agreement can be finalized. It owns about 40 percent of prominent Internet company, Alibaba Group, the parent company of Alibaba.com, Reuters learned. Yahoo’s 35 percent stake in Yahoo Japan to Softbank Corp., which already controls 42 percent of the unit, could come within a few weeks.

Relations between Yahoo, Softbank and Alibaba have chilled in recent years with Alibaba founder Jack Ma anxious to buy back Yahoo’s stake in his company.  Softbank founder and major shareholder Masayoshi Son has been publicly critical of Yahoo’s track record as an innovator and its approach to international markets.

“There is a triangular relationship between the three parties. Anything that happens with Alibaba has to involve all three parties,” one of the sources said, as Softbank also owns a stake in Alibaba.

Shares of Yahoo Japan rose 3.7 percent in Tokyo after Reuters first reported the talks on expectations Softbank would pay a premium for the stake.

Softbank, Japan’s No.3 mobile phone operator, closed 3.6 percent weaker on worries over how it would finance the deal, while Alibaba.com dipped 1.3 percent in Hong Kong. Softbank, in a statement released through the Tokyo Stock Exchange, said it was not in talks with Yahoo and had no intention of investing in the Japanese web portal.

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