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May 13, 2011 1:23 am
In a brief statement after the US markets closed on Thursday, Yahoo said the sale of online payments business Alipay to a group controlled by Jack Ma, Alibaba’s founder, “occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders”.
Yahoo, which owns 43 per cent of the largest electronic commerce company in China but has poor relations with it, first disclosed the sale in a regulatory filing earlier this week. It said then, and repeated on Thursday, that Yahoo and Japan’s Softbank, Alibaba’s second big outside shareholder, were negotiating with Alibaba over how the Chinese company would be compensated for the loss of Alipay.
“We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders,” Yahoo said.
Both Yahoo and Softbank have a director on the board of closely held Alibaba Group. Under the terms of Yahoo’s 2005 investment of $1bn in Alibaba, a board majority must approve any transaction worth more than $10m.
A source involved in the matter said no board meeting had been held, and Yahoo said that it has only learned of the deal, which transpired last August, this March 31.
With Alipay valued by some in the billions of dollars, Yahoo investors were surprised that Alibaba’s compensation for disposing of the unit had not been finalised before it changed hands. They were alarmed even more that such a deal could happen without board approval.
In after-hours trading, Yahoo shares, which fell 7 per cent on Wednesday, declined another 5 per cent.
Alibaba did not respond to a request for comment.
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