June 2 (Bloomberg) -- Alibaba Group Holding Ltd. Chief Executive Officer Jack Ma said he expects to reach an agreement with shareholders Yahoo! Inc. and Softbank Corp. over the spinoff of the company’s Alipay online payment business.
“I’m optimistic,” Ma said at the AllThingsD conference in Rancho Palos Verdes, California, yesterday. Ma said he’s sure a deal will be reached on Alipay, spun off to facilitate its application for an online payment license in China.
Yahoo, whose shares have slumped about 15 percent since it disclosed the spinoff last month, is seeking compensation on concern the company’s investment in China would lose value. Alipay was transferred to a Ma company without the approval of Yahoo and Softbank, the U.S. shareholder had said.
“I heard a lot of words like ‘stealing,’" Ma said. "How could I do that, when I have so many people looking at me all the time.”
Yahoo, which owns about 39 percent of Alibaba, China’s biggest online-commerce company, fell 4.3 percent to $15.85 yesterday in New York trading. Shares of the Sunnyvale, California-based company have underperformed the Nasdaq since May 10, when Yahoo disclosed Alibaba no longer owned China’s most-popular online-payment operator.
An agreement on Alipay was reached between Yahoo and Alibaba, Reuters reported this week, citing people close to the matter. The accord requires the consent of Japan’s Softbank, according to the report.
Foreign Ownership Rules
Alibaba’s board, including Yahoo co-founder Jerry Yang and Softbank President Masayoshi Son, had discussed for three years the need to comply with restrictions on foreign ownership of payment services in China, which prompted the reorganization, Ma said on May 14. The transfer of Alipay was lawful and transparent, Ma has said.
Yahoo is making “significant” progress in talks to ensure Alibaba is compensated for the spinoff of Alipay, Chief Executive Officer Carol Bartz said on May 25. Alibaba’s management has been “very committed and cooperative” in the negotiations, she said.
Alipay was awarded an online payment license from the People’s Bank of China last week, Alibaba said May 26.
Yahoo’s holding in Alibaba Group may account for as much as three-quarters of the U.S. company’s market value, according to estimates by Sandeep Aggarwal, an analyst at Caris & Co. in San Francisco. Alipay may be worth $5 billion, according to Gabelli & Co.
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