April 20, 2024

Bits: Partial Agreement Seen in Yahoo-Alibaba Dispute

Yahoo and Alibaba Group have informally agreed to end a three-week old dispute over the ownership of the Chinese payment service, Alipay.

But the deal is far from final because Softbank Corporation, the other party in the talks, has yet to agree, according to a person who was briefed on the matter and demanded anonymity because of the sensitivity of the negotiations.

The agreement between Yahoo and Alibaba, a Chinese Internet company in which Yahoo owns a 43 percent stake, is still a major sign of progress. The two companies have publicly feuded about Alibaba’s transfer of its Alipay online payment service to a separate company.

Investors feared that the surprise shift in ownership had eroded the value of Yahoo’s stake in Alibaba. Wall Street values Yahoo in large part because of its investment in Alibaba, which controls several e-commerce sites including the China’s equivalent of eBay.

News of the ownership uncertainty triggered a 12 percent decline in Yahoo’s shares. They recovered 3.3 percent on Tuesday to close at $16.55 based on a potential resolution to the dispute.
Any such deal would depend on Softbank, the Japanese technology company that also owns a large stake in Alibaba. Softbank, which is taking part in the negotiations, has so far been unwilling to agree.

The talks center on how much Alipay’s new owners must compensate Alibaba. What is unusual about the negotiations – and worrisome to Wall Street — is that they are taking place after the transfer occurred, not before, as is customary for business deals.

Yahoo has said it only learned of the transfer in March, months after the fact. Alibaba has argued that Yahoo had known for a while that a transfer was necessary to comply with Chinese laws that require local ownership.

Last week, Carol A. Bartz, Yahoo’s chief executive, dodged an onslaught of questions about Alibaba and the negotiations at her company’s investor day. She portrayed the discussions as making progress, but she did not divulge many new details.

On Tuesday, Yahoo would only say that it continued to be pleased with the progress of the talks. Alibaba declined to comment.

Reuters news service first reported Yahoo’s agreement with Alibaba, along with Softbank’s reticence, on Tuesday.

Article source: http://bits.blogs.nytimes.com/2011/05/31/partial-agreement-seen-in-yahoo-alibaba-dispute/?partner=rss&emc=rss

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