updated 11:40 am EST, Mon February 18, 2008
Alibaba Stake in Yahoo
Any potential Microsoft takeover of Yahoo is likely to require dealing with Chinese mega-reseller AliBaba before it can go ahead, says a source purportedly close to the latter company. As Yahoo owns nearly a 40 percent controlling stake in AliBaba, the Chinese firm is said to be pressing for greater influence from its management in any potential deal between Yahoo and an interested buyer, particularly in managing the transfer of shares.
While executives at AliBaba are said to assume Microsoft will complete its $44.6 billion or higher bid, the company is concerned that its senior staff may lose control if Microsoft is successful. Chinese rules and social customs may also come into play as foreign companies are often discouraged from obtaining commanding positions in native firms, which could happen if Microsoft chose to replace AliBaba's executives with their own.
Publicly, Yahoo has rejected Microsoft's bid with the argument that it undervalued the search engine developer, though it did not mention whether the Microsoft offer would significantly reorganize Yahoo itself or related firms like AliBaba.