Alibaba 'interested' in buying all of Yahoo

@CNNMoneyTech October 1, 2011: 3:02 PM ET
Yahoo owns a big stake in Chinese Internet firm Alibaba Group. But Jack Ma, the CEO of Alibaba, has said he is

Yahoo owns a big stake in Chinese Internet firm Alibaba Group. But Jack Ma, the CEO of Alibaba, has said he is "interested" in buying all of Yahoo.

NEW YORK (CNNMoney) -- Jack Ma, the CEO of Chinese Internet conglomerate Alibaba Group, said late Friday that his company would be "interested" in buying all of struggling online media firm Yahoo.

A spokesman for Alibaba confirmed that Ma made that comment in response to a question following Ma's keynote address at the China 2.0 conference at Stanford University.

Shares of Yahoo (YHOO, Fortune 500) rose 3% in after hours trading Friday. A spokesperson for Yahoo said the company had no comment about Ma's remarks.

Yahoo is holding a press conference in New York Monday. Ross Levinsohn, the executive vice president of Yahoo's Americas region, is speaking. But Yahoo has given no indication as to what the topic of the press conference will be.

Yahoo currently owns about a 40% stake in Alibaba, but the relationship between these two partners has been contentious as of late. A purchase of Yahoo would essentially allow Ma to buy back control of that stake.

Former Yahoo CEO Carol Bartz and Ma had a dispute over ownership of Alipay, an online payment unit similar to eBay (EBAY, Fortune 500)-owned PayPal. In May, Yahoo disclosed that Alibaba shifted 100% ownership of Alipay to a new entity controlled by Ma.

Yahoo's only hope is to sell itself

That news caused a huge slide in shares of Yahoo since many investors had felt that a main reason to own Yahoo was the hope that it would be able to cash in on its stake in Alipay as well as other Alibaba-owned assets such as online commerce site Taobao.

Although Yahoo, Alibaba and Softbank, a Japanese Internet firm that is also an investor in Alibaba, reached a deal over Alipay ownership in July, Yahoo investors remained frustrated. Bartz was fired in September.

Bartz was widely credited for cutting costs at Yahoo in order to preserve profits. But she was never able to turn around the company's sagging sales.

Despite a search partnership with Microsoft (MSFT, Fortune 500), Yahoo continued to lose ground to search king Google (GOOG, Fortune 500). Social network Facebook has emerged as a fierce competitor for so-called online display (i.e. graphic and video) advertising as well.

Yahoo named chief financial officer Tim Morse as interim CEO. But there has been intense speculation in the past month that Yahoo may agree to sell itself instead of hiring a permanent successor for Bartz and remaining independent.

Private equity firm Silver Lake Partners has been often mentioned as a possible Yahoo suitor. So has online media firm AOL (AOL), even though it is facing massive challenges of its own. In addition, Yahoo's market value of about $16.6 billion is nearly 13 times greater than AOL's.

Microsoft, which offered to buy Yahoo for more than $47 billion in 2008 and was turned down, has also been named as a likely bidder for Yahoo.

The Alibaba spokesman said Ma indicated at the Stanford event Friday that private equity firms and strategic investors have approached him about the possibility of a deal. But the spokesman added that Ma said Alibaba may be willing to buy all of Yahoo on its own. To top of page

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