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Alibaba offers US$2.5b to privatize listed unit and gain full control
Source: Bloomberg News |
February 22, 2012, Wednesday
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Print Edition
Print Edition
ALIBABA Group Holding Ltd, in talks to buy back a stake owned by Yahoo! Inc, has offered as much as HK$19.6 billion (US$2.5 billion) to privatize a listed unit and gain full control of China's biggest corporate e-commerce site.
The firm bid HK$13.50 a share for the 27 percent of Alibaba.com Ltd it doesn't already own, according to a Hong Kong stock exchange statement yesterday. That's a 46 percent premium to the last closing price.
Alibaba Group Chairman Jack Ma may take over the listed unit and purchase the Yahoo stake as he tries to turn around the company after a fraud scandal and drop in subscriptions.
"The company probably wants to privatize in order to execute a long-term strategy, instead of facing pressures from capital markets," Alicia Hu, who rates Alibaba.com "underperform" at Daiwa Securities Capital Markets in Hong Kong, said before the announcement.
Alibaba Group has also signed a US$3 billion loan with six banks, according to two people familiar with the matter. Australia & New Zealand Banking Group Ltd, Credit Suisse Group AG, DBS Bank Ltd, Deutsche Bank AG, HSBC Holdings Plc, and Mizuho Corporate Bank Ltd will provide the funds, the people said, asking not to be identified because details are private.
Alibaba Group may be reorganizing its assets, including Alibaba.com, as it prepares its own initial public offering, said Connie Gu, an analyst at BOCOM International in Beijing. Alibaba.com may see its growth slow as a weaker global economy means fewer Chinese exporters pay to use the site to sell their goods abroad, Gu said before the announcement.
"Privatizing the Hong Kong-listed unit will help the Alibaba parent's plans for the IPO," Gu said.
Alibaba Group, China's biggest e-commerce company, "won't rule out the possibility" of going public, Ma said in a letter to employees in June. In 2007, Alibaba.com held a US$1.7 billion offering in Hong Kong, then the biggest IPO for an Internet company since Google Inc's in 2004. The sale price matched yesterday's HK$13.50 buyout offer.
Alibaba.com's shares will resume trading today after being suspended on February 9. The stock closed at HK$9.25 on February 8 and has climbed 15 percent this year after falling 42 percent in 2011.
Alibaba.com's "depressed" stock price is affecting the company's reputation and employee morale, Chief Financial Officer Maggie Wu said in a conference call.
An IPO for the parent is "several years" away, she said.
Alibaba Group is being advised on the transaction by Rothschild, Credit Suisse and Deutsche Bank. HSBC is working with Alibaba.com, and Somerley Ltd will act as adviser to a board committee.
The firm bid HK$13.50 a share for the 27 percent of Alibaba.com Ltd it doesn't already own, according to a Hong Kong stock exchange statement yesterday. That's a 46 percent premium to the last closing price.
Alibaba Group Chairman Jack Ma may take over the listed unit and purchase the Yahoo stake as he tries to turn around the company after a fraud scandal and drop in subscriptions.
"The company probably wants to privatize in order to execute a long-term strategy, instead of facing pressures from capital markets," Alicia Hu, who rates Alibaba.com "underperform" at Daiwa Securities Capital Markets in Hong Kong, said before the announcement.
Alibaba Group has also signed a US$3 billion loan with six banks, according to two people familiar with the matter. Australia & New Zealand Banking Group Ltd, Credit Suisse Group AG, DBS Bank Ltd, Deutsche Bank AG, HSBC Holdings Plc, and Mizuho Corporate Bank Ltd will provide the funds, the people said, asking not to be identified because details are private.
Alibaba Group may be reorganizing its assets, including Alibaba.com, as it prepares its own initial public offering, said Connie Gu, an analyst at BOCOM International in Beijing. Alibaba.com may see its growth slow as a weaker global economy means fewer Chinese exporters pay to use the site to sell their goods abroad, Gu said before the announcement.
"Privatizing the Hong Kong-listed unit will help the Alibaba parent's plans for the IPO," Gu said.
Alibaba Group, China's biggest e-commerce company, "won't rule out the possibility" of going public, Ma said in a letter to employees in June. In 2007, Alibaba.com held a US$1.7 billion offering in Hong Kong, then the biggest IPO for an Internet company since Google Inc's in 2004. The sale price matched yesterday's HK$13.50 buyout offer.
Alibaba.com's shares will resume trading today after being suspended on February 9. The stock closed at HK$9.25 on February 8 and has climbed 15 percent this year after falling 42 percent in 2011.
Alibaba.com's "depressed" stock price is affecting the company's reputation and employee morale, Chief Financial Officer Maggie Wu said in a conference call.
An IPO for the parent is "several years" away, she said.
Alibaba Group is being advised on the transaction by Rothschild, Credit Suisse and Deutsche Bank. HSBC is working with Alibaba.com, and Somerley Ltd will act as adviser to a board committee.
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