Yahoo! has acquired a 40% stake in alibaba.com, a Chinese B2B portal that also operates a consumer auction site, email and payment services and search. In addition to paying $1 billion for the stake in alibaba.com, Yahoo! will also hand over control of Yahoo!’s Chinese operations, valued at $700 million, to alibaba.com. After the deal is closed (expected for the fourth quarter of 2005), the combined corporate entity will be valued at $4 billion.
Alibaba.com is run by its founder and CEO Jack Ma, a 40 year old entrepreneur and former English teacher, who is already being called the “grandfather of the Chinese Internet”.
According to bankers, Mr Ma has closed the deal with Yahoo! after playing Yahoo! off against eBay, who had also shown interest in alibaba.com in the recent past. While fans call Mr Ma a visionary, critics question the substance of his company, pointing out that alibaba.com only generated revenues of $46 million last year and questioning the company’s business model and focus.