July 15, 2024

DealBook: Alibaba Group to Split Up E-Commerce Site

9:10 p.m. | Updated

SHANGHAI — The Alibaba Group, one of the biggest Internet companies in China, said Thursday that it had decided to split its popular e-commerce site, Taobao.com, into three separate units to promote better growth, dashing investors’ hopes of an imminent public listing of the unit.

The Alibaba Group did, however, raise for the first time the tantalizing prospect that it might go public later.

The split breaks Taobao — a fast-growing online marketplace for consumer goods — into a consumer marketplace like eBay, an online shopping mall of major retailers and internationally known brands, and an Internet search engine focused on e-commerce.

The decision eliminates the possibility that the company’s Taobao unit or any of its three parts will seek an initial public offering soon, said John Spelich, a spokesman for the Alibaba Group.

Many investors had been pressing Alibaba to list the Taobao unit, saying it would probably become one of the most valuable Chinese Internet companies.

Jack Ma, the former English teacher who runs the Alibaba Group, has for years said that a Taobao listing was not imminent and that the unit had to focus on development first. Another Alibaba Group unit, Alibaba.com, was publicly listed in Hong Kong in 2007 and is now valued at $7.5 billion.

But in a letter to employees released Thursday, Mr. Ma said that the company was considering listing the Alibaba Group. Although no timetable was given, and people close to the company said it was unlikely in the next year, it was the first time Mr. Ma had raised the prospect. The American Internet company Yahoo and the SoftBank Group of Japan own most of the Alibaba Group.

“We won’t rule out the possibility of taking Alibaba Group public in the future, as a way to reward our employees and shareholders who support and continue to believe in us,” Mr. Ma said in the letter, which the company posted online.

Wallace Cheung, an Internet analyst at Credit Suisse, said that the reorganization was good for Alibaba.com, which got a new executive, and Taobao, because it created units that were potentially more flexible. But he also said the changes could pose management challenges for the parent company.

The decision was announced as Alibaba and the major shareholders, Yahoo and SoftBank, were trying to resolve a dispute over another Alibaba unit, Alipay, which was transferred to a Chinese company that is majority-owned by Mr. Ma. Alibaba said the transfer had been made to comply with Chinese law about licenses for online payment companies, but Yahoo said it had been done without the board’s approval.

Alibaba is also trying to recover from the resignations of the chief executive and chief operating officer of its Alibaba.com unit in February after an internal fraud investigation. Although the two executives were not involved in the fraud, they took responsibility for misdeeds by some employees in the unit.

The company said about 100 employees had allowed bogus companies in China to register and sell products on Alibaba.com’s international Web site as “gold suppliers,” meaning reliable. Instead, those companies were taking orders for goods, accepting payments and then closing their operations and escaping with the money.

Article source: http://feeds.nytimes.com/click.phdo?i=092a3703f734b7b9c0e7293ef60f6cd6

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