Yahoo’s $1 Billion Investment in China’s Alibaba.com
Yahoo Inc finalized an agreement to buy 40 percent of Alibaba.com for one billion dollars cash, as Yahoo boosts its Chinese presence. Alibaba.com is China’s largest e-commerce company and part of the deal includes Yahoo handing over the running of its China operations to Alibaba (meaning Alibaba.com will run Yahoo China).
The Yahoo – Alibaba deal is now the largest investment by a foreign company to break into China’s 100 million Internet user market (second only to the US) and creates an $4 billion e-commerce giant out of Alibaba, which will now compete directly with eBay and Google over the Chinese Internet market.The agreement also gives Yahoo 35 percent voting rights in Alibaba.com, making it the largest strategic investor in its Chinese partner. In return Alibaba wins the right to use and grow the Yahoo brand in China.
“Yahoo is investing one billion dollars in cash to purchase Alibaba.com shares from (the) company and other shareholders,” said Yahoo in a press statement. “Yahoo will contribute its Yahoo China business to Alibaba.com. The two companies will work together in an exclusive partnership to grow the Yahoo brand in China.” Interestingly enough, Alibaba.com was founded in 1999 by English teacher Jack Ma. I’m sure Jack is slap happy over his new capital.