Alibaba Suspended as Buyback of Yahoo Stake Looms With Loan

Alibaba.com Ltd. (1688) suspended its shares from trading in Hong Kong as the company prepares a statement about a transaction involving its parent, which is raising about $3 billion to buy back stock held by Yahoo! Inc. (YHOO)

The statement, to address speculation about an unspecified deal involving the parent, may be “potentially price sensitive,” Alibaba.com said in a filing to the Hong Kong stock exchange today. Alibaba Group Holding Ltd. (ALIBABZ), China’s biggest e- commerce company, owns more than 70 percent of Alibaba.com.

Parent Alibaba Group wants to finalize terms of a loan of about $3 billion by the end of this week for a potential buyback of shares held by Yahoo, a person familiar with the matter said this week. Yahoo said Feb. 7 it is “devoting significant resources” to talks that may lead to the sale of its Asian assets, valued at more than $10 billion.

“The suspension indicates the discussions on the transaction with Yahoo have reached a certain stage,” said Kelvin Ho, who rates Alibaba.com shares “hold” at Yuanta Securities in Hong Kong. “The likelihood of a deal has increased.”

Julie Huang, a Hong Kong-based spokeswoman at Alibaba.com, declined to comment on the trading halt today. The company rose 5.5 percent in Hong Kong yesterday, the most since Nov. 22.

Yahoo Board

Yahoo is the biggest shareholder in closely held Alibaba Group with a stake of about 40 percent and sold its stake in Alibaba.com in 2009.

Yahoo this week added two new board members and said Chairman Roy Bostock is among five directors who won’t stand for re-election this year. The shakeup may prompt an increased effort by Yahoo to sell its Asian investments, which include stakes in Alibaba Group and Yahoo Japan Corp. (4689), Herman Leung, an analyst with Susquehanna International Group in San Francisco, has said.

The value of those assets is about $11.5 billion, said Sameet Sinha, an analyst at B. Riley & Co. in San Francisco. The current board may aim to announce a deal to sell the assets before Yahoo’s annual shareholders’ meeting, he said.

Shares of Sunnyvale, California-based Yahoo fell 0.3 percent to $15.78 in New York yesterday.

Yahoo is considering cutting its stake in Alibaba Group to about 15 percent, two people briefed on the matter told Bloomberg News in December.

Bostock’s departure came a few weeks after co-founder Jerry Yang severed ties with Yahoo, including leaving the boards of Yahoo Japan and Alibaba Group. In January, Yahoo hired Scott Thompson as CEO to replace Carol Bartz, who was ousted in September.

Alibaba (ALIBABZ) stepped up efforts to buy back the stake after the departure of Bartz, who had opposed a sale.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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