Alibaba Offers $2.5 Billion to Take Listed Unit Private
Andrew Harrer/Bloomberg
The Alibaba.com logo is seen on a shirt at the 2012 International Consumer Electronics Show in Las Vegas.
The Alibaba.com logo is seen on a shirt at the 2012 International Consumer Electronics Show in Las Vegas. Photographer: Andrew Harrer/Bloomberg
Feb. 22 (Bloomberg) — Justin Weiss, an analyst at JI Asia in Tokyo, talks about Alibaba Group Holding Ltd., and the company’s offer of as much as HK$19.6 billion ($2.5 billion) to privatize a listed unit and gain full control of China’s biggest corporate e-commerce site, Alibaba.com Ltd.
Alibaba.com reported quarterly profit that missed estimates as anti-fraud measures cut the number of vendors using its site for exports. Weiss speaks with John Dawson on Bloomberg Television’s “First Up.”(Source: Bloomberg)
Feb. 21 (Bloomberg) — Jiong Shao, regional head of Internet and media at Macquarie Securities in Hong Kong, talks about China’s Internet companies.
Alibaba Group Holding Ltd. plans to take private its Alibaba.com Ltd. unit in a deal that may value the Hong Kong-listed company at as much as $8.7 billion, according to two people with knowledge of the matter. Shao speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
Alibaba Profit Misses Estimates After Decline in Subscribers
Andrew Harrer/Bloomberg
The Alibaba.com Ltd. logo is seen at the company’s booth during the 2012 International Consumer Electronics Show in Las Vegas, Nevada.
The Alibaba.com Ltd. logo is seen at the company’s booth during the 2012 International Consumer Electronics Show in Las Vegas, Nevada. Photographer: Andrew Harrer/Bloomberg
Alibaba Group Holding Ltd. (ALIBABZ), in talks
to buy back a stake owned by Yahoo! Inc. (YHOO), offered as much as
HK$19.6 billion ($2.5 billion) to privatize a listed unit and
gain full control of China’s biggest corporate e-commerce site.
The company bid HK$13.50 a share for the 27 percent of
Alibaba.com Ltd. (1688) it doesn’t already own, according to a Hong
Kong Stock Exchange statement yesterday. The shares surged as
much as 43 percent to HK$13.26, the most in more than four years.
Chairman Jack Ma seeks to buy out minority Alibaba.com
shareholders four years after a $1.7 billion initial public
offering as the unit warned of worsening earnings tied to a
change in strategy. The buyout may facilitate Ma’s efforts to
acquire Yahoo’s holdings in Alibaba Group, said Dundas Deng, an
analyst at Guotai Junan Securities.
“By taking the unit private, it will make it more flexible
for the parent to reorganize its assets, and this will be
helpful to the discussions with Yahoo,” Deng, who rates
Alibaba.com “accumulate,” said by phone from Shenzhen, China.
The offer is 46 percent more than Alibaba.com’s last
closing price before it was suspended Feb. 9. The stock closed
at HK$9.25 on Feb. 8 after declining 42 percent last year,
underperforming Chinese Internet rivals Baidu Inc. and Tencent
Holdings Ltd.
$3 Billion Loan
Alibaba.com’s “depressed” stock price is affecting the
company’s reputation and employee morale, Maggie Wu, chief
financial officer of the unit, said in a conference call
yesterday. The company reported quarterly profit that missed
estimates and predicted that vendor growth will slow.
Alibaba.com traded at HK$13.16 as of 9:35 a.m. in Hong Kong.
The parent company also signed a $3 billion loan with six
banks, according to two people familiar with the matter.
Australia New Zealand Banking Group Ltd., Credit Suisse Group
AG, DBS Bank Ltd., Deutsche Bank AG, HSBC Holdings Plc, and
Mizuho Corporate Bank Ltd. will provide the funds, the people
said, asking not to be identified because details are private.
John Spelich, a Hong Kong-based spokesman for Alibaba Group,
declined to comment on the size of the loan.
A $3 billion facility would be the biggest U.S. dollar loan
in Asia outside Japan since May, when Glencore International
AG’s Singapore unit signed an $8.34 billion loan due in 2014 to
refinance debt, according to data compiled by Bloomberg.
Yahoo Talks
Fourth-quarter income declined 5.9 percent to 386 million
yuan ($61 million) from 410 million yuan a year earlier,
Alibaba.com reported yesterday. That compared with the 432
million-yuan average of five analysts’ estimates compiled by
Bloomberg. Sales rose to 1.7 billion yuan from 1.5 billion yuan.
Fewer exporters are paying Alibaba.com to set up online
accounts after bogus vendors defrauded buyers on its website,
prompting Chief Executive Officer Jonathan Lu to toughen
screening. The company shifted its focus from adding paying
customers to improving the quality of its website, and that will
negatively affect earnings, he said on the conference call.
Alibaba Group (ALIBABZ), operator of Taobao, China’s biggest online
shopping site, has stepped up efforts to buy back shares from
Yahoo since Carol Bartz stepped down as CEO of the Sunnyvale,
California-based company in September. Bartz had opposed a sale.
Talks over the possible sale of Yahoo’s stake in its Japan
operations and in Alibaba Group reached an impasse, a person
briefed on the matter, who asked not to be identified because
the discussions are private, told Bloomberg News this month.
Deutsche, HSBC
The discussions had focused on a tax-efficient deal and the
parties may pursue other approaches, the person said.
The planned buyout of Alibaba.com is “unrelated” to the
discussions between Alibaba Group and Yahoo, Wu said. The parent
is being advised on the transaction by Rothschild, Credit Suisse
and Deutsche Bank. HSBC is working with Alibaba.com, and
Somerley Ltd. will act as adviser to a board committee.
The premium offered by Alibaba Group compares with the 29
percent average in 56 completed or pending Internet deals
costing more than $1 billion that were announced in the past
decade, according to data compiled by Bloomberg.
The buyout of Alibaba.com is valued at 33 times the unit’s
earnings last year. New York-listed Baidu, China’s most valuable
Internet company, trades at 45 times earnings multiple,
according to data compiled by Bloomberg.
Talks to reorganize Yahoo’s holding in Alibaba Group are
“not conditional” on the success of the offer for Alibaba.com,
Wu said. Alibaba Group won’t raise its offer price for the unit,
she said.
Shareholder Vote
The proposal to privatize Alibaba.com requires approval of
75 percent of the votes cast by unit shareholders at a meeting
to approve the deal, according to the Hong Kong exchange filing.
Alibaba Group, which controls 73 percent of the unit’s shares,
isn’t eligible to vote. The meeting date isn’t yet set.
Alibaba Group may be reorganizing its assets, including
Alibaba.com, as it prepares its own initial public offering,
said Connie Gu, an analyst at BOCOM International in Beijing.
Alibaba.com may see its growth slow as a weaker global economy
means fewer Chinese exporters pay to use the site to sell their
goods abroad, she said before the announcement.
“Privatizing the Hong Kong-listed unit will help the
Alibaba parent’s plans for the IPO,” Gu said.
Any potential IPO for Alibaba Group is “several years”
away, Alibaba.com’s Wu said yesterday.
Alibaba IPO
In 2007, Alibaba.com held a $1.7 billion offering in Hong
Kong, then the biggest IPO for an Internet company since Google
Inc. (GOOG)’s in 2004. The sale price matched yesterday’s HK$13.50
buyout offer.
Alibaba.com had about $1.8 billion in cash and short-term
investments at the end of December.
Yahoo is the biggest shareholder in closely held Alibaba
Group with a stake of about 40 percent. Alibaba sold the holding
in 2005 for $1 billion and ownership of Yahoo’s Chinese unit.
Tokyo-based Softbank Corp. (9984) owns about 30 percent of the Chinese
company. Softbank spokesman Fumihiro Ito and Yahoo Japan
spokesman Toru Nagano declined to comment after Alibaba’s
announcement.
Yahoo, eclipsed by Google Inc. and Facebook Inc. in online
search and advertising growth, is reviewing proposals to unwind
its Asian investments and focus on turning around the main
Internet business. The value of Yahoo’s Asian assets is about
$11.5 billion, according to Sameet Sinha, an analyst at B. Riley
Co. in San Francisco.
To contact the reporters on this story:
Mark Lee in Hong Kong at
wlee37@bloomberg.net;
Wendy Mock in Hong Kong at
wmock3@bloomberg.net
To contact the editor responsible for this story:
Michael Tighe at
mtighe4@bloomberg.net