The Chief Executive Officer of Alibaba Group has publicly announced his interest in acquiring the American search engine giant Yahoo.
Jack Ma, Alibaba founder and CEO, expressed his interest at the China 2.0 conference at Stanford University. Silver Lake Partners, Providence Partners, Andreessen Horowitz and Microsoft have also reached out to Yahoo?s board.
He also added that many other private firms had approached him, to help Alibaba?s bid for Yahoo, however, he declined to name the investors. When asked about his friendship with the Yahoo director and co-founder Jerry Yang, Ma said it was business and not personal.
Alibaba Group owns a host of Internet-based businesses that include Alibaba.com – popular e-commerce portal, Taobao Mall – business-to-consumer online marketplace, Taobao Marketplace – consumer-to-consumer shopping portal, eTao – shopping search engine, Alibaba Computing – data-centric cloud computing services and Alipay, a third-party online payment platform. Alibaba Group and its affiliated entities now have more than 22,000 employees across some 70 cities and regions, including China, Hong Kong, India, Japan, Korea, Taiwan, the United Kingdom, and the United States.
YAHOO + ALIBABA
Jack Ma?s history with Yahoo goes back many years when the US search giant acquired a 40% stake in Alibaba. The relationship between the two company quickly turned sour over human rights issues and a recent dispute over the online payment service Alipay.
The Chinese entrepreneur transferred ownership of Alipay into a separate company that he controlled. Yahoo said it was unaware of the transfer until recently and implied that Alibaba had not been adequately compensated.
The two sides later settled the dispute.
The earlier attempts of acquisition had been foiled by none other than the former Yahoo CEO Carol Bartz. Now that she is not part of the picture, the situation might favour Alibaba.
The CEO Carol Bartz was fired earlier last month after she was unable to jumpstart growth at the onetime highflying web company.
Yahoo’s board of directors has started to engage with executive-search firms as it continues to look for a new CEO while entertaining buyout offers for the Internet company, people familiar with the matter said. Yahoo’s board is putting a higher priority on evaluating a potential sale of all or parts of the Internet company over its search for a new CEO, the sources added.
Looking at the chaos at Yahoo, Alibaba seems to a good option.
First Yahoo was for sale, then it was not. Jerry Yang unofficially took over as CEO and now board member David Kenny is vying for the CEO position.
On the other hand, Alibaba is thriving under Jack Ma?s leadership. Recent Yahoo! filings have shown that Alibaba revenue is up 150% year-over-year as of March 2011 with losses down significantly and it is looking at a net worth of $27.5 billion. Yahoo?s market cap, at the moment, is a little over $17 billion. If Jack Ma wants to buy back the 43% stake Yahoo! has in Alibaba, it might be worth it if he just buys Yahoo outright. Alibaba?s biggest ace is that its holdings are private assets which allows them to perform more efficiently and effectively.
Yahoo?s biggest issue has been the lack of direction and the outright neglect of some pretty big projects, such as del.icio.us and flickr. With an Alibaba takeover, Yahoo will be able to either spin off or privatise its diverse properties, allowing it to get more control and direction than they?ve deliberately needed. Alibaba?s 65 million users will also help expand Yahoo! in China, Japan, and other international marketplaces that are growing increasingly crucial in the globalised realm of today’s technology.
On the flip side, Yahoo’s acquisition by Alibaba will allow the Chinese company to tap into an enormous Western user base and get a strong foothold in the US market. Technology giants like Google have found it increasingly difficult to enter and compete in Asian markets, especially in China. Alibaba has the advantage of expanding from China instead of expanding to China, and acquiring Yahoo!will allow it to increase its global reach and become a worthy competitor of companies like Google and Microsoft.
Source: Wall Street Journal, New York Times