Shares in internet firm Yahoo rose this week, after reports and wide speculation that Chinese ecommerce giant Alibaba is preparing a takeover bid.
The detailed speculation is that Alibaba Group, one of China’s largest online retailers, will be purchasing yahoo in co-operation with private equity firms Blackstone and Bain Capital.
Thursday’s trading ended with Yahoo shares 3.3% higher on the Nasdaq, with a daily high of 4.8%.
Reports are unconfirmed by the consortium itself, but say that Alibaba, Blackstone and Bain could make an offer of up to $20 per share. This would put Yahoo well above its Thursday closing price of $16.23. Stocks have seen such a rise on this news because at $20 per share, Yahoo’s speculated value is as high as $25 billion (£16 billion).
A spokesperson from Alibaba Group said that they have “not made a decision to be part of a whole company bid for Yahoo,” and that they were weighing their options. Still, the market seems convinced that something positive is brewing behind closed doors at Yahoo.
Alibaba vs. Yahoo
The move is extremely important as Yahoo has been facing increasing difficulties keeping old of its market share of internet consumers during the rise of Google and Facebook. Its search, news, and social programmes are struggling, leading to the dismissal of chief executive Carol Bartz earlier in the year.
Meanwhile, the Alibaba Group has seen its fortunes turn for the better each year, growing robustly with the boom in the Chinese internet market.
China is now the world’s biggest online market place, with 500 million users, and Alibaba has a huge market share of users, marking 50 million unique visitors each day.
The Group’s online shopping website, Taobao, is the largest in China today.
Some gather that the speculated Alibaba takeover is a revenge move against Yahoo, purchased a 43% stake in the Alibaba group in 2005 for $1 billion.
Relations between the two companies have since soured, after which Alibaba tried to buy back its stake.
Relations turned even more sour after that, seeing Alibaba seal off its online payment business as a separate firm, effectively keeping Yahoo from benefitting from it. Yahoo accused the company of hiding the Alipay switch, claiming that the change had been made in August 2010 but only been made known to Yahoo in March 2011.