China Solution: Yahoo, SoftBank and Alibaba Reach Agreement
Yahoo, SoftBank and the Alibaba Group have reached an agreement in their contentious dispute around the Alipay payments unit.
The trio have been in extended talks since Alibaba’s CEO Jack Ma spun Alipay out from Alibaba without the approval of Yahoo and Japan’s SoftBank, which own large stakes in Alibaba.
At the time, he said he did so in order to get critical regulatory approvals from the Chinese government. The move prompted an ugly fight between Alibaba and its partners.
In a statement, the trio said:
“The agreement is consistent with the two agreed-upon principles established at the outset of the negotiations: structure the inter-company relationship between Alipay and Taobao in order to preserve the value within Taobao and, by extension, within Alibaba Group; and provide that Alibaba Group is appropriately compensated for the value of Alipay.”
Under terms of the agreement, the three companies said that Alipay will continue providing payment services to Alibaba’s Taobao commerce site and other subsidiaries; Alibaba will be paid almost half of Alipay’s pretax income; and Alibaba will get between $2 billion and $6 billion — or 37.5 percent of the total equity value — in the event of an Alipay IPO or other liquidity event.
Yahoo’s stock has risen 3.6 percent on the news so far this morning, but it is still just below $14 a share.
There will be a call at 5:45 am PT to explain it all, which I will be liveblogging, but here’s the full press release: