China's Alibaba Takes Yahoo! for $1 Billion

12 August 2005

Chinese internet giant clearly needs no help from the Forty Thieves when it comes to striking a deal with US multinational web portal Yahoo!

Driven, say some critics, by a seeming mix of cupidity and stupidity, the Sunnyvale, California-headquartered Yahoo has agreed not only to hand the online Orientals over one billion US dollars (€804.25m; £553.37m) for a stake of just 40%, but also cede total control of the company to its Chinese management.

Boasts Jack Ma, Alibaba chairman/ceo, famed for his entrepreneurial acumen: "This is not a joint venture. This is a company completely controlled by Alibaba managers."

His Yahoo opposite number Terry Semel, claims the US company is "thinking long-term in China". Justifying what appears to be a deal heavily skewed in favor of its new partner, Semel explains: "In order to succeed in China, it will be a question of how strong your local management will be."

Alibaba is China's second-largest internet auctioneer, operating business-to-business and consumer auction sites. The deal with Yahoo values the newly merged entity at about $4 billion.

Data sourced from Financial Times Online; additional content by WARC staff