Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

Alibaba bids to take listed unit private for $2.5 billion

share with twitter share with LinkedIn share with facebook
share via e-mail
0
02/21/2012 | 02:04pm CET

Jack Ma's Chinese e-commerce firm Alibaba Group has offered around $2.5 billion to take its Hong Kong-listed Alibaba.com unit private, stressing the move was unrelated to any possible deal to buy back shares owned by Yahoo Inc.

Alibaba Group is offering investors HK$13.50 ($1.74) in cash per share to take Alibaba.com private, the same price as at the company's IPO in 2007, the two firms said in a statement late on Tuesday.

The plan to take Alibaba.com private had nothing to do with separate complex talks with Yahoo on buying back part of the U.S. Internet pioneer's 40 percent stake in Alibaba, the Chinese firm said.

"Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company," said Ma, who is chairman of Alibaba Group and board chair of Alibaba.com.

The offer is at a more than 60 percent premium to Alibaba.com's 60-day average closing price. The shares were suspended earlier this month at HK$9.25 - a 12-week closing high, but down 30 percent from last July. The stock will resume trading on Wednesday.

The offer is for the 27 percent of Alibaba.com that Alibaba doesn't already own. The shares are held by investors including Morgan Stanley, Vanguard Group and Capital International, according to Thomson Reuters data.

"If you're an existing shareholder, that's great news. It's a 46 percent increase from the last close," said Jin Yoon, a Hong Kong-based analyst with Nomura.

"The business was going through some significant changes and getting to that type of premium would have taken some significant amount of time. So, if you're a shareholder, you weren't going to see that kind of upside in the near term."

The moves leaves Ma still to tackle the issue of how to deal with the Yahoo stake, bought in 2005 by handing its China Yahoo operations to Alibaba, plus about $1 billion.

Ma has been trying to buy back part of the stake, but talks on a complex asset swap - that might would have given Yahoo cash, a possible holding in Alibaba operating assets and still with 15 percent of Alibaba Group - have stalled, sources said, over how to value Taobao, Alibaba's fast-growing online retail business.

Alibaba Group will finance the Alibaba.com deal through external funding and internal cash resources, it said.

Alibaba has signed a $3 billion loan giving it the money it needs to buy out the unit, sources have told Thomson Reuters publication Basis Point.

Alibaba.com executives said on a call with analysts on Tuesday that the offer price could not be increased under Hong Kong regulations. And Maggie Wu, Alibaba.com's chief financial officer, said that if the offer was rejected, Alibaba would not be able to make another offer for 12 months.

Alibaba spokesman John Spelich said the move was not a pre-condition for any eventual initial public offer of the group.

"There are no plans for a group IPO right now. If it were to take place, it will take place several years in the future," Spelich said by email.

WEAK Q4 RESULTS

News of the privatization offer came shortly after Alibaba.com posted its first profit decline in more than two years in the fourth quarter of 2011, as a weak global economy hit the number of paying members for its services.

October-December net profit fell 6 percent to 385.95 million yuan ($61.3 million) from 410.4 million yuan a year earlier, roughly in line with forecasts from two analysts polled by Thomson Reuters I/B/E/S. It was the first quarterly profit fall since the 2009 third quarter.

The company, which operates an e-commerce website linking Chinese businesses to overseas buyers, warned its financial performance and membership growth could be dented further as it shifts to a value-added-services model from a subscription-based service.

"The company is undergoing a business transition, and I think things will start to probably recover in 2013," said Dick Wei, a Hong Kong-based analyst for J.P. Morgan.

Alibaba.com's paying members fell 2.8 percent in the fourth quarter to 765,363 as international buyers have become less active due to the euro zone debt crisis and a weak recovery in the United States. The e-commerce firm's exposure to international markets makes its turnover sensitive to the performance of major economies.

Alibaba.com said the changing focus of the business, which will be more on improving the platform than on increasing subscriber numbers, would impact the company's results in the medium term, and was a key factor behind the privatization.

"With this offer, we provide our shareholders a chance to realize their investment now at an attractive cash premium rather than waiting indefinitely during this period of transition," Ma said in the statement.

($1 = 6.3017 Chinese yuan)($1 = 7.7541 Hong Kong dollars)

(Additional reporting by Lee Chyen Yee in Hong Kong; Editing by Jason Subler and Ian Geoghegan)

By Melanie Lee

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news
Date Title
06:24p ENERGY TRANSFER PARTNERS LP : Trump acts to advance Keystone XL, Dakota Access pipelines
06:24pDJTRANSCANADA : Trump Takes Action on Keystone, Dakota Pipelines -- 2nd Update
06:24p SPECTRUM BRANDS : New Line of GloFish® Cycle Lights and Décor by Tetra® Brand of Spectrum Brands, Inc. - Pet, Home & Garden Division Sheds New Light on Fishkeeping
06:24p Global Metallic Pigments Market 2017-2021 - Key Vendors are ALTANA, BASF, Carl Schlenk, Silberline Manufacturing & Sun Chemical - Research and Markets
06:24p TOP 3 EMERGING TRENDS IMPACTING THE GLOBAL FACE SHIELD SCREEN MARKET FROM 2017-2021 : Technavio
06:23p Development bank EBRD readying northern Cyprus plans
06:23p Saudi Aramco asks banks to pitch for world's largest share sale
06:23p MAUNA KEA TECHNOLOGIES : Reports Fourth Quarter and Full Year 2016 Sales
06:22p MEDIA ADVISORY : Correctional Service of Canada invites media to tour Fraser Valley Institution, mother-child program
06:21p ECO-SHIFT POWER CORP. : Changes in Registrant's Certifying Accountant (form 8-K)
Latest news
Advertisement
Hot News 
-20.79%BT : Italy scandal deepens and UK slows, wiping $9 billion off shares
8.02%PFEIFFER VACUUM TECHNOLOGY : Busch announces $1 billion cash offer for Pfeiffer Vacuum
-31.99%Stocks recover, dollar steadies as investors eye earnings
-4.93%VERIZON COMMUNICATIONS : Yahoo Sees Verizon Deal Taking Longer Than Expected -- 2nd Update
-6.28%DIXONS CARPHONE : says large TVs drive Christmas sales
Most Read News
12:09p Stocks recover, dollar steadies as investors eye earnings
01/23 SAMSUNG ELECTRONICS : Elec warns of political risks as chips boost fourth quarter profit
09:23a BT : Italy scandal deepens and UK slows, wiping $9 billion off shares
12:09p Johnson & Johnson plans more price transparency; eyes U.S. tax, healthcare changes
11:01a TSX rises as Keystone owner leads energy gains
Most recommended articles
01/17DJS&P 500, Nasdaq Futures -- Technical Analysis
12:18p EXCLUSIVE : Italian prosecutors launch probe into BT's local unit - sources
12:15p Italy regulator summons Intesa Sanpaolo and Generali
12:12pDJTRANSCANADA : Trump Takes Action on Keystone, Dakota Pipelines -- Update
12:09p Johnson & Johnson plans more price transparency; eyes U.S. tax, healthcare changes