| GTS Mark |
10-03-2011 01:57 PM |
The Next Owner Of Yahoo Is....
Alibaba CEO Checkmates Yahoo Board
Alibaba Group CEO Jack Ma announced yesterday that the Chinese internet giant is interested in buying Yahoo. That is bad news for Yahoo?s Board of Directors, if they were hoping to get a competitive price.
Yahoo bought a 43% stake of Alibaba in 2005, and it?s no secret that Ma was interested in buying that back. But the news that he wants to acquire all of Big Purple is a potential game-changer. "The whole piece of Yahoo," Ma told the audience at Stanford University?s China 2.0 Conference when asked what part of the company he was interested in. "China is already ours, right? It's already in my pocket."
By going public with his interest in acquiring Yahoo, Ma just cut the legs out from under the Yahoo board.
Many see Yahoo?s Alibaba stake as its most valuable asset, with some analysts reporting that Alibaba may be worth as much as?if not more than?the rest of Yahoo. But the value of that asset depends on Ma?s cooperation (remember when he sold pieces of Alibaba to himself earlier this year?). Also, the 2005 deal gave Ma right of first refusal to any potential Yahoo acquisition. A source close to the situation told the Financial Times that ?Mr. Ma?s statement was a warning to potential rival bidders who might believe that his right of first refusal was not watertight.?
After this announcement, who would dare offer a competitive bid that risked alienating Ma and creating years of legal limbo?
?Nobody can want to run the risk that their bid gets stuck in lengthy court battles,? the FT source said.
Ma put the Yahoo board in checkmate by saying, in essence, ?if anyone is going to buy Yahoo, it will be me. To anyone else interested in slicing off a piece of Big Purple, give me a call.?
So now that Yahoo knows who its suitor is, the question becomes how much will Ma pay? That?s where the news gets especially bad?how can Yahoo expect a competitive bid when there is only one serious bidder, particularly one with such a negative view of the company?
?We are probably one of the very few companies that really understand Yahoo USA very well,? Ma said.
And his thoughts? ?Alibaba management had ridiculed [Yahoo] as worthless,? the FT reported.
My take: Insult, meet injury
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