Chinese boss says: I've got the $20 billion to buy Yahoo
The Chinese e-commerce company Alibaba has pulled together the $20 billion in cash reserves it believes is necessary to buy US internet giant, Alibaba CEO Jack Ma has told reporters.
The Yahoo logo
According to iChinaStock News, he said at a news conference, "Do you know how much it will cost to acquire Yahoo? It needs $20 billion, based on the company's valuation today. ... We have the most cash reserves among Internet companies, and we have already prepared $20 billion."
It is an astonishing turnaround. Just six years ago the fledgling Chinese internet company turned to Yahoo for $1 billion in financial backing to help it compete with e-bay in China. Yahoo now has a 40 per cent shareholding in Alibaba.
Yahoo had no comment on Ma's statement, although he had said earlier this month that he was talking to Yahoo about a possible purchase. Ma, a former English teacher is a personal friend of Yahoo co-founder Jerry Yang.
"You are now watching China's industry being able to make large purchases abroad," Anna Han, a specialist in international business transactions told the San Jose Mercury News.
However, the buy would "raise a host of thorny issues" said the paper - and could be opposed by Washington. One problem is the restrictions the Communist government places on the free flow of so-called 'sensitive" information.
U.S. regulators have blocked Chinese telecommunications giant Huawei Technologies from buying American companies - and US phone firms, under pressure from U.S. officials, have backed away from deals to buy equipment from Huawei. Early this year, Chinese plans to buy the assets of cloud-computing company 3Leaf Systems of Santa Clara were withdrawn.
Harvard law professor John Palfrey told the Mercury News, "The big Web companies are becoming like utilities with very sensitive information involved," The United States government would think differently about this kind of a transaction than it would about deal involving a hardware manufacturer, he said.
At a California conference last month, Ma said, "We are very interested in Yahoo because our Alibaba Group is so important to Yahoo and Yahoo is also very important to us.
"We are talking to them, and they are talking to us."
Since Ma said that on September 30, Yahoo's stock has jumped 19 percent.
Palfrey said that if Alibaba bought Yahoo, " It would change the bargain customers have made with Yahoo. It would change the dynamic of who would be attracted to signing up for Yahoo email and other services where they leave personally identifiable information." But he added, "It's not to say the world would end."