Yahoo Inc announced yesterday it would pay US$1 billion in cash to acquire a 40 percent stake in the Chinese e-commerce company Alibaba.com (阿里巴巴).
As part of the deal, Yahoo has also agreed to contribute its China business to Alibaba, according to a joint statement from the two companies. The combined entity will also include 3721.com, a Chinese language search engine that Yahoo acquired last year, it said.
"Yahoo is investing 1 billion dollars in cash to purchase Alibaba.com shares from company and other shareholders," a joint statement said ahead of a press conference in Beijing.
"The agreement gives Yahoo a 40 percent economic interest and 35 percent voting rights which would make it the largest strategic investor in Alibaba," it said.
The agreement makes Yahoo the largest strategic investor in Alibaba, and is the biggest deal yet in a flurry of investments in China by foreign Internet companies eager for a share of a market with more than 100 million people online.
The alliance between Yahoo and Alibaba represents a challenge to US-based eBay, the world's biggest online commerce company, which in 2003 bought a Chinese portal, eachnet.com.
Alibaba's online payment system, AliPay, is competing with eBay's PayPal for dominance in China.
"We believe the combination of Yahoo and Alibaba is the best approach for Yahoo to win in this region," Terry Semel, chairman and chief executive officer of Yahoo, was quoted as saying in the statement.
The deal was expected to be completed in the fourth quarter of this year, it said.
Alibaba was founded in 1999 by Jack Ma (
Alibaba runs Chinese and English-language auction sites serving foreign firms looking for Chinese wholesale suppliers and individual Chinese buyers and sellers.
The Chinese government said last month that the number of people online in China had reached 103 million -- the second-biggest population of Web users after the US.
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