Yahoo, Alibaba Sign Deal with Japan’s Softbank

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Internet giant Yahoo Inc., along with Chinese online firm Alibaba Group, has entered into an agreement with Japan’s Softbank Corp. for the compensation plan involving online payment service Alipay.

Internet giant Yahoo Inc., along with Chinese online firm Alibaba Group, has entered into an agreement with Japan’s Softbank Corp. for the compensation plan involving online payment service Alipay.

Under the agreement, the three companies would have equal participation in the future financial performance of Alipay – which was spun off into a separate company controlled by Jack Ma, the chief executive of Alibaba.

It will be recalled that in May 2011, Yahoo, which has 43 percent stake in Alibaba, shocked investors when it announced that the Chinese online firm had spun off Alipay without giving them anything in return.

The spinoff was held in mid-March 2011 without the consent of the investors, Yahoo said.

But under the new agreement, if Alipay goes public or otherwise be liquidated, Alibaba will get at least $2 to $6 billion, while Yahoo and Softbank, along with Ma, will hold stakes in Alibaba.

Aside from participation to the company, the deal would also preserve the value of online auction site Taobao, which is also owned by Alibaba.

The company said that Alipay, the biggest third-party online payment platform in China, will continue providing services to Alibaba and its subsidiaries on preferential terms.

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