What an Alibaba IPO Would Mean for Yahoo

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Sept. 25 (Bloomberg) -- S&P's Scott Kessler discusses the outlook for a potential Alibaba IPO and what it may mean for Yahoo. He speaks with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)

He is with me on the phone.

You just heard my colleague, doug macmillan.

Investors have been anticipating an ipo from ali baba for about a year's time.

Do you think it will happen in the next two months?

I think a lot of investors would like for it to happen as soon as possible.

Last september, as you referenced, yahoo finally announced it is selling back half of the equity it had in that company.

And in that arrangement, at some point in the next couple of years, the bobby -- ali baba would likely pursue some kind of ipo.

Frankly, there has not been a lot of movement in yahoo's stock, even though there is a lot of discussion about what we will see next for ali baba.

What does this mean, though, literally for yahoo.

You just alluded to it, but this will be a big piece of the puzzle.

No doubt.

The primary reason why yahoo shares have performed so well.

A lot of people understandably would point to marissa mayer joining sco -- as ceo.

And you could reference the fact that people seem to be excited about the decisions that yahoo has made in the past couple of quarters.

But to be realistic, we think a lot of the gain and the interest in yahoo shares are predicated on one thing, that is, ali baba.

I know you were asking doug macmillan a little bit about valuation.

When we think about yahoo, we think about its stake in ali baba.

It is a 24% stake.

Counting taxes and the like, it is probably in the vicinity of being worth $15 billion.

If it came public at that valuation, it would make it the sixth largest internet company on the planet, and that is conservative in estimation.

If you look at just full transactions, it is bigger than amazon and ebay combined.

We do not think investors have a handle on how big this company is.

Like that is exactly right.

-- that is exactly right.

What is important is you have to think about why it has been taking as long as some would have expected for ali baba to announce and to consider and pursue an ipo.

Part of it is management changes, but a lot of it has to do with the specific transactions of where it might list a mile as the discussion earlier indicated, what kind of ownership structure would be in place post-ipo.

It seems that twitter is now more ready to go public.

And ali baba, if you talked to someone six months ago, i think they would have said that would be surprising at best.

Is the company trying to do it before years end?

It has been our understanding that they are.

If you look at the major milestones that we will look for next, after they filed their confidential s1, we are thinking it might take about a month for the company to interact and engage with the sec.

And then presumably, they will complete and file their open s- 1. and then from that point, no earlier from three weeks from that point, they will start the roadshow and then maybe a week or two at the most.

We think that twitter is very capable of completing an ipo before thanksgiving, which a lot of people do not realize is pretty late this year in november, i think november 28. noted on two fronts.

Scott kessler from s&p capital

This text has been automatically generated. It may not be 100% accurate.


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