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Yahoo May Have Reached Agreement With Alibaba

June 1, 2011

According to reports, Yahoo Inc. has reached an agreement with Chinese partner Alibaba Group over Yahoo’s compensation for the transfer in ownership of Alibaba payments service Alipay.

Reuters first reported on Tuesday that the companies reached an agreement regarding Alipay.

The sources told Reuters that the deal requires the consent of Softbank Corp. founder Masayoshi Son, an Alibaba board member.

Yahoo claimed it was blindsided by Alibaba’s restructuring of Alipay, an online e-commerce payment similar to eBay Inc.’s PayPal.

Alibaba countered that Yahoo was aware of the transaction by virtue of having a board seat now held by former Yahoo chief executive and directive Jerry Yang.

According to a Reuters report, terms of the agreement include points made during Yahoo’s analyst meeting last week.  Yahoo Chief Financial Officer Tim Morse said the company was still in negotiations with Alibaba and laid out a framework for a deal involving compensation and value of Alipay.

The report said the relationship between Alipay and Taobao was similar to that of PayPal and Ebay.

The Alipay transfer and its timing is only a small act in a larger drama playing out among Alibaba Group, Softbank and Yahoo.

Yahoo’s 43 percent ownership in Alibaba Group has been a major draw for investors to indirectly buy into China, the world’s largest Internet market.

Alibaba Group said that Alipay has over 550 million registered users as of the end of last year, and was facilitating about 8.5 million transactions daily.

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