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Rumor: Alibaba Group Considering Full Acquisition of Yahoo, 10/04/11

According to industry sources, Chinese e-commerce conglomerate Alibaba Group is currently in discussions with global IT private investment firm Silver Lake and Russian investment group Digital Sky Technologies (DST) over the possibility of jointly acquiring US internet firm Yahoo. The sources added that over the last several weeks, the three firms had already been in contact with Yahoo and its advisors regarding a possible acquisition, with the negotiations still in the early stages. Another industry source suggested that any attempt by the three firms to purchase Yahoo would likely run into opposition from US regulators, and noted that the US government has many restrictions on acquisition by foreign investors of US firms in the communications industry.

On October 7, Alibaba Group chairman Jack Ma, during his keynote address at the China 2.0 conference at Stanford University, said he would be "very interested" to acquire Yahoo, adding, "There are many companies interested in purchasing Yahoo, and we are currently in discussions with Yahoo." A Yahoo spokesman declined to comment on the news.

Yahoo co-founder Jerry Yang said that there were currently several companies that had contacted Yahoo's advisors regarding a potential acquisition. An industry source revealed that Yahoo had retained investment bank Allen & Company to help it evaluate its various options.

On September 22, Alibaba Group introduced a plan to sell existing shares held by company employees representing a combined stake of approximately 5%, with Silver Lake and DST both purchasing shares.

An industry source noted that according to the US "Foreign Investment and National Security Act," the Committee on Foreign Investment in the United States (CFIUS) is likely to oppose any foreign entity's acquisition of Yahoo, as Yahoo, owning to the popularity of its e-mail and instant messaging services, plays a key role in the communications industry. Subsequent to its cooperative agreement with Microsoft on online search, Yahoo has also become the US' second largest search engine.

Keywords: Allen & Company overseas Jack Ma e-commerce Internet online search instant messaging CFIUS e-mail Silver Lake Yahoo Alibaba Group national security Jerry Yang M&A Digital Sky Technology


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The information contained in this newsletter is based upon sources that Marbridge Consulting believes to be reliable, and we have made every effort to translate the original articles or article excerpts as faithfully as possible. However, Marbridge Consulting makes no warranty of and assumes no legal responsibility for the accuracy of either the original source material or the English language translations.

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