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Yahoo closes the door on Alibaba

China Daily, January 6, 2012

• A Yahoo! billboard is seen along the road in San Francisco, California. [CFP]

  
  
  

  Alibaba Group Holding Ltd, China's biggest e-commerce company, may not find it easy to buy Yahoo! Inc's assets after the largest US Web portal appointed a new chief executive officer, analysts said.

  Yahoo hired Scott Thompson as chief executive officer, according to a company statement on Wednesday, and has directed the former president of EBay Inc's PayPal unit to complete a strategic review and reverse a slump in growth that led to the ousting of Carol Bartz in September.

  The appointment of the new CEO suggests that Yahoo is not likely to sell all or part of itself in the near future, said Xie Wen, a Chinese IT critic who briefly worked as president of Yahoo China in 2006.

  "It shows that Yahoo doesn't find the sale of itself very attractive," Xie said. He added that it may take some time for the new CEO to get used to Yahoo, evaluate the sale and negotiate with various parties to make a deal, if there is one.

  Thompson said his priorities are boosting the company's revenue and putting it at the forefront of innovation.

  The new CEO will need to assess options that include divesting its Asian assets and selling a stake in itself to private equity companies. Thompson's appointment makes the sale of all of Yahoo less likely, said Brett Harriss, an analyst at Gabelli & Co.

  Thompson may play a role in extracting value from Yahoo's international assets. Aside from its main Internet portal business, Yahoo holds about 40 percent of Alibaba and co-owns Yahoo Japan with Softbank Corp. Yahoo estimated that the Alibaba stake was worth about $14 billion on a pretax basis in October.

  Thompson's primary focus will be on the "core business", and he will work closely with the board on the company's strategic review, Yahoo Chairman Roy Bostock said in the statement.

  Yahoo is considering a "wide range" of opportunities for the company's business, as well as specific investments or dispositions of assets," Bostock said.

  Some investors had speculated that Yahoo would sell itself after Bartz was ousted.

  "It's probably a slight negative because I think the best outcome for Yahoo would be an all-out takeover by Microsoft," said Gabelli's Harriss. "Hiring a new CEO makes the sale of the whole company unlikely."

  In October, Jack Ma, chief executive officer of Alibaba Group, said he was interested in buying Yahoo. Alibaba has hired a Washington DC lobbyist, according to Reuters, a move that could help Alibaba respond to any US political opposition to a complete takeover of Yahoo.

  Alibaba said it looks forward to working with Yahoo's new chief executive to deliver value to Yahoo shareholders, Alibaba spokesman John Spelich said on Wednesday, according to a report in the Wall Street Journal.

  Four banks preparing a roughly $4 billion loan for Alibaba are seeking to attract Chinese lenders into the lead group to help arrange and underwrite the loan, according to a person familiar with the matter.

  Credit Suisse Group AG, DBS Bank Ltd, Deutsche Bank AG and Mizuho Corporate Bank Ltd are arranging the loan, three people familiar with the matter said on Dec 15. The size of the loan is too large for the four to underwrite among themselves, said the person who spoke on Thursday, declining to be identified because the details are private.

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