Shares in Chinese online shopping portal Alibaba.com (阿里巴巴) soared in Hong Kong yesterday after its parent company said it plans to take the firm private for US$2.3 billion.
Alibaba.com shares closed 42.7 percent higher at HK$13.20 in strong volume after parent Alibaba Group announced its offer of HK$13.50 per share. It was the stock’s first day of trade since it was suspended on Feb. 9.
The offer matches the price at which the unit was listed in 2007, the group said in a statement to the Hong Kong Stock Exchange late on Tuesday.
“Taking Alibaba.com 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,” group chairman Jack Ma (馬雲) said. “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.”
Alibaba.com posted a net profit of 1.71 billion yuan (US$271.5 million) last year, up 16.6 percent over the previous year, but with weakness in the fourth quarter.
The firm said its fourth-quarter net profit fell 6 percent from a year earlier, citing cautiousness due to a weak global environment.
“The global economy was sluggish in 2011 due to lackluster economic conditions in the major developed markets,” it said in a statement. “Cautious sentiment is restraining consumption in developed economies, which is negatively impacting emerging economies and developing nations. China is unlikely to prove immune to the global slowdown.”
Hangzhou-based Alibaba is reportedly planning to borrow US$3 billion to buy back the stake Yahoo owns in the company, as the struggling US Internet giant overhauls its Asia holdings.
Ma has a longstanding offer to buy all or part of Yahoo.
Shares in Alibaba were suspended at the board’s request earlier this month due to media speculation about its Yahoo buyback and privatization plans.
Its share price had dropped 44 percent in the 12 months leading up to the suspension and it has not traded above the 2007 offer price since May last year.
Tanrich Securities (敦沛證券) investment manager Jackson Wong (黃志陽) said that given Alibaba’s earnings prospects and recent stock market performance, investors would be brave to reject the buyout bid.