Yahoo may downsize 40% stake in Alibaba

By: Chenda Ngak
Topics: Tech Talk

(Credit: Daniel Terdiman/CNET)

(CBS) - Yahoo may bow out of the Asian market by cutting its stake in the Alibaba Group Holding Ltd. The web portal currently has a 40 percent stake and is looking to cut that down to 15 percent.

Yahoo has many suitors, but board leans toward selling minority stake

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Bloomberg reports, two sources close to the matter claim "Yahoo's board is scheduled to meet later today to consider the transaction." Alibaba is the largest e-commerce company in China.

Besides reducing its footprints in China, the deal would also include selling a stake in Yahoo Japan Corp. One of the sources say the sale would be valued at over $17 billion.

"Yahoo would get a big cash infusion at a time when it was trying to revive its core United States operations, which have long suffered from declining revenue and an exodus of senior employee," says the New York Times.

The timing is right for Alibaba to buy back its shares. Yahoo purchased its stake in 2005 for $1 billion. According to Bloomberg, former Yahoo chief executive officer Carol Bartz stood in the way of Alibaba's bid to buy back Yahoo's stake.

There's much speculation about the future of Yahoo. Names of several investment firms have been circulating, who are interested in buying Yahoo outright. The Blackstone Group, Bain Capital, China's Alibaba Group and Japan's Softbank Corp. have all showed interest.