Alibaba Bids to Take E-Commerce Site Private

By Beecher Tuttle February 22, 2012

Shares of skyrocketed on Wednesday after news broke that its parent company plans to take the e-commerce site private.

Alibaba Group Holding Ltd. said that it will look to buy the minority stake in the website for a whopping $2.3 billion, according to the Associated Press (AP). Alibaba currently owns 73 percent of

The offer of $13.50 Hong Kong dollars per share represents a 46 percent premium on the stock's previous listing price of HK$9.25. Trading of had been suspended since Feb. 9 at the request of company, which is undergoing a shift in business strategy that is expected to result in slower short-term revenue growth and limited earnings, Bloomberg reported.

The site – which pairs manufacturers, wholesalers and trading companies with buyers – said that it is no longer adding paying customers at the same rates and has begun refocusing on improving the user experience. With the projected short- to medium-term impact on financial results, Alibaba Group felt it appropriate to take the e-commerce site private.

"Taking 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," Jack Ma, founder, chair and CEO of Alibaba Group and Board chair of, noted in a statement explaining the move. "With this offer, we provide our shareholders a chance to realize their investment now at an attractive cash premium rather than waiting indefinitely during this period of transition."'s chief financial officer, Maggie Wu, said that the website's "depressed" market value was negatively affecting the Alibaba name and employee morale, according to Bloomberg. Shares plummeted 42 percent last year as fewer paying customers signed up for the service.

Buyers quickly snapped up shares on Wednesday, sending the stock price near the buyout target of HK$13.50. Although most analysts expect the deal to go through, an independent board committee will evaluate the proposal and offer recommendations to shareholders. The buyout requires 75 percent independent shareholder approval to go through, according to Bloomberg.

The move could help Alibaba in its buyout negotiations with Yahoo, which owns around a 40 percent stake in the company. Alibaba has been trying to buy back its stake from Yahoo for months but has had trouble inking a deal.

"By taking the unit private, it will make it more flexible for the parent to reorganize its assets, and this will be helpful to the discussions with Yahoo," Dundas Deng, an analyst at Guotai Junan Securities, told Bloomberg.

Edited by Chris Freeburn

TechZone360 Contributor

Related Articles

Consumer Privacy in the Digital Era: Three Trends to Watch

By: Special Guest    1/18/2018

Digital advertising has exploded in recent years, with the latest eMarketer data forecasting $83 billion in revenue this year and continued growth on …

Read More

CES 2018: Terabit Fiber - Closer Than We Think

By: Doug Mohney    1/17/2018

One of the biggest challenges for 5G and last mile 10 Gig deployments is not raw data speeds, but middle mile and core networks. The wireless industry…

Read More

10 Benefits of Drone-Based Asset Inspections

By: Frank Segarra    1/15/2018

Although a new and emerging technology, (which is still evolving), in early 2018, most companies are not aware of the possible benefits they can achie…

Read More

VR Could Change Entertainment Forever

By: Special Guest    1/11/2018

VR could change everything from how we play video games to how we interact with our friends and family. VR has the power to change how we consume all …

Read More

Making Connections - The Value of Data Correlation

By: Special Guest    1/5/2018

The app economy is upon us, and businesses of all stripes are moving to address it. In this age of digital transformation, businesses rely on applicat…

Read More