Biz bazaar Alibaba goes private, watches shares soar
Firm exits market while mulling Yahoo! stake slurp
Shares in China's Alibaba.com jumped 43 per cent today when it announced it was going private.
Parent company Alibaba Group said it was going to pay shareholders HK$13.50 for their stocks, a premium of around 46 per cent on the last closing price before the announcement of HK$9.25.
Shares have since spiked to HK$13.20 as investors look to turn a quick profit.
Rumours of Alibaba.com coming off the market have been closely aligned with the rumoured negotiations between Alibaba Group and Yahoo!, which owns a 43 per cent stake in the dotcom.
However, Alibaba made it clear in its filing with the Hong Kong Stock Exchange today that taking itself private did not hinge on its ability to strike a deal with the struggling US-based Yahoo!
"The offeror has been engaged in discussions with Yahoo! regarding the possibility of restructuring Yahoo!’s holdings in the offeror. These discussions may or may not result in an agreement and, accordingly, the possible Yahoo! transaction may or may not proceed," the filing read.
"The scheme [to take the site private] will not be conditional on completion of the possible Yahoo! transaction, nor will the offeror enter into any agreement relating to the possible Yahoo! transaction that is conditional on the scheme becoming effective.
"A further announcement will be made by the offeror and the company if and when appropriate," it added.
Although going private is not dependent on Alibaba taking back control of the Yahoo! stake, a canned statement from the firm on the scheme is full of chat about their "transitional" phase and "shifts in business strategy".
“With this offer, we provide our shareholders a chance to realise their investment now at an attractive cash premium rather than waiting indefinitely during this period of transition,” Alibaba Group CEO Jack Ma said.
And of course, going private means that the site is no longer answerable to its shareholders, which will grant it greater freedom to make decisions - such as buying back the Yahoo! stake.
It also means that Alibaba can look at long-term development, rather than having to turn a good profit every year to keep its shareholders happy - in other words, it can spend lots of money now on stuff it reckons will be good for the company eventually.
“Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company,” Ma said. ®