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June 1, 2011 1:47 am
Yahoo and Alibaba have reached a provisional deal to resolve their dispute over the controversial ownership transfer of the Chinese internet group’s Alipay online payment service, according to three people familiar with the matter.
However, a final deal over the issue, which has cast a pall over Yahoo’s ability to reap the full benefits of its Asian investments, has been held up by a lack of agreement with Japanese internet investor Softbank, these people said.
Softbank is pushing Alibaba for greater concessions than those already agreed to in principle by Yahoo, according to one of the people familiar with the talks.
The dispute stems from last year’s transfer of Alipay to a group controlled by Jack Ma, Alibaba’s founder, before any agreement had been reached over how Alibaba’s shareholders would be compensated. Yahoo holds a 43 per stake Alibaba, while Softbank owns a further 30 per cent.
News of the provisional agreement between Alibaba and Yahoo suggested that the fraught relationship between Mr Ma and Carol Bartz, the Yahoo chief executive, had not become an obstacle to a settlement, as some investors had feared.
It comes a day before Mr Ma is due to appear at an internet industry conference in California, where he is expected to be closely questioned over the matter.
According to the person familiar with Softbank’s position, Masayoshi Son, the Japanese group’s founder, was angered by the handling of the Alipay transfer and has been intent on pushing Mr Ma for more favourable terms.
Softbank on Wednesday said only that ”talks among the three companies [Yahoo, Alibaba and Softbank] are ongoing”.
The talks are complicated by discussions that Yahoo has indicated it is having discussions with Softbank over its stake in Yahoo Japan.
Carol Bartz, Yahoo’s chief executive, said at the company’s annual analyst day last week that it had made “significant progress” towards a deal on Alipay. However, it has now emerged that the terms of a deal are more advanced than most observers had suspected. The provisional agreement was first reported on Tuesday by Reuters.
Additional reporting by Jonathan Soble in Tokyo
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