Alibaba in talks with Temasek for Yahoo! stake

Alibaba Group Holding Ltd has discussed providing financing to buy the 40 per cent stake in held by Yahoo! Inc with Singapore’s Temasek Holdings Pte, according to people familiar with the matter.

Temasek, the state-owned investment company, may help fund an offer in return for a bigger share of privately-owned Alibaba Group, said the people, who declined to be identified because the discussions are confidential. Temasek isn’t interested in owning Yahoo!, one person said. Yahoo!’s stake in Alibaba may be worth about $13 billion, using a valuation by the Singapore investor last month.

Temasek’s backing would aid Alibaba Group chairman Jack Ma’s bid to gain more control of the company he founded and increase its investments in China. The S$193-billion ($147 billion) sovereign wealth investor said in July it was “bullish” on China and was seeking more deals there.

“As an existing investor in Alibaba, Temasek may be interested in increasing its ownership,” said Victor Yip, an analyst at UOB-Kay Hian in Hong Kong. “This is just one of the many proposals that are flying around involving Yahoo!.”

The possible bid to buy Yahoo! out of Alibaba, China’s biggest e-commerce company that was valued at $32 billion in an investment by Temasek last month, came after the US shareholder fired chief executive officer Carol Bartz and started a review of its strategy. Bartz had, last year, turned down efforts by Alibaba to buy shares held by Yahoo!, straining relations with Ma. Based on that valuation, Yahoo!’s 40 per cent stake in Alibaba is worth $13 billion, according to Bloomberg News calculations.

ALIBABA-TEMASEK ARRANGEMENT
Alibaba.com, the Hong Kong-listed unit of Alibaba Group, fell 0.9 per cent to HK$7.85 in Hong Kong on Monday, while the benchmark Hang Seng Index was little changed.

The Alibaba-Temasek arrangement would likely be part of a possible takeover bid for Yahoo! with private-equity firm Silver Lake and Russia’s Digital Sky Technologies, another person said. Alibaba, Silver Lake and DST have discussed forming a group to make an offer, people with knowledge of the situation said last week. Silver Lake has let Yahoo! know of its efforts and is trying to line up financing to pursue the deal, the people said. No clear deal structure or consortium has yet emerged, and a bid for Yahoo! might not materialise, said the people.

“We don’t comment on market speculation,” said Stephen Forshaw, a spokesman for Temasek. Spokespeople for Yahoo! and Hangzhou-based Alibaba declined to comment.