Alibaba Said Likely to Sell More IPO Stock in IPO

July 16 (Bloomberg) -- Bloomberg Contributing Editor David Kirkpatrick examines the state of Yahoo as the company announces it will keep a larger stake in Alibaba than expected while returning cash to shareholders and ponders what would happen if Alibaba decided to buy Yahoo. He speaks on “Bloomberg Surveillance.”

Shares offered by Alibaba Group Holding Ltd. (BABA) and its backers are likely to account for more of the Chinese company’s initial public offering as Yahoo! Inc. (YHOO) scales back, people with knowledge of the matter said.

Alibaba, in its IPO filings, hasn’t identified any selling shareholders other than Yahoo. Yahoo said yesterday it has cut the maximum number of shares it can sell in the IPO to 140 million from 208 million.

Alibaba and investors other than Yahoo can make up the difference by increasing the amount they plan to sell, the people said, asking not to be identified discussing private information. The size of the IPO and valuation are still under discussion, and once the price range and IPO share count are decided, Alibaba and its current shareholders will determine how much they will sell, the people said.

A spokesman for Alibaba declined to comment.

The smaller amount Yahoo can sell represents about 6 percent of Hangzhou-based Alibaba, the IPO prospectus shows. The Sunnyvale, California-based company first invested in Alibaba in 2005, and owns a total of 524 million shares of the company, or around 23 percent of the Chinese company, the IPO filings show.

Topping Facebook

At current estimates of Alibaba’s value, the stake Yahoo is offering is worth about $10 billion, data compiled by Bloomberg show. Yahoo said yesterday it will return some of the proceeds from the sale to shareholders.

Photographer: Tomohiro Ohsumi/Bloomberg

Masayoshi Son, chairman and chief executive officer of SoftBank Corp., left, speaks to Jack Ma, chairman of Alibaba Group Holding Ltd., as Ma arrives for his speech at SoftBank World 2014 in Tokyo, Japan, on Tuesday, July 15, 2014. Alibaba’s shareholders include Japan’s SoftBank Corp., private-equity firm Silver Lake Management LLC and Canada Pension Plan Investment Board. Close

Masayoshi Son, chairman and chief executive officer of SoftBank Corp., left, speaks to... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

Masayoshi Son, chairman and chief executive officer of SoftBank Corp., left, speaks to Jack Ma, chairman of Alibaba Group Holding Ltd., as Ma arrives for his speech at SoftBank World 2014 in Tokyo, Japan, on Tuesday, July 15, 2014. Alibaba’s shareholders include Japan’s SoftBank Corp., private-equity firm Silver Lake Management LLC and Canada Pension Plan Investment Board.

If Alibaba offers a greater than 10 percent stake in the sale, the deal could bigger than Facebook Inc.’s $16 billion share sale in May 2012. The company is targeting a sale of closer to 12 percent, people with knowledge of the matter have said, which means it has the potential to be the largest ever in the U.S.

Alibaba’s other shareholders include Japan’s SoftBank Corp., private-equity firm Silver Lake Management LLC and Canada Pension Plan Investment Board.

To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net Elizabeth Wollman

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