Alibaba claims Alipay spinoff lawful

14 May 2011

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Alibaba Group Holding Ltd chairman Jack Ma said the spinoff of the Alipay online payment business was "lawful" and "transparent," after its biggest shareholder Yahoo! Inc claimed it has not been consulted prior to the transfer.
 
"We are always committed to ensure our operations are 100 per cent lawful," Ma said today in Hong Kong. "The matter of Alipay is not settled yet" as negotiations are continuing with Yahoo and Softbank Corp, Alibaba's second-biggest shareholder. The negotiations centre on the post-transfer commercial arrangements, Ma said.

Yahoo, owner of the biggest US web portal, said this week that it was not informed until 31 March about transfer of Alipay equity to a vehicle outside of Alibaba in August 2010.

Ma said today that Alibaba's board had discussed for three years the need for compliance with restrictions on foreign ownership of payment services in China, which had led to the reorganisation of Alipay, the nation's biggest online payment service.

"We are transparent in all we do," Ma said at the shareholders' meeting of Alibaba Group unit Alibaba.com Ltd. "For the management, there was only one option open to us, and we have done the right thing."

Yahoo is in talks with Alibaba Group and Softbank to "preserve the integrity of this investment and maximise shareholder value," the company said yesterday.
 
Yahoo shares have been down 11 per cent in Nasdaq Stock Market trading since 10 May, after the Sunnyvale, California- based company declared that the entire equity of Alipay had been transferred to a company controlled by Ma, who is also chief executive officer at Alibaba Group.
 
Through its stake in Alibaba Group, China's biggest e- commerce company, Yahoo benefits from increasing internet usage in the Asian country, where restrictions on web content render it difficult for US companies operate on their own.
 
Alibaba yesterday said its board, which included Yahoo co- founder Jerry Yang as also Softbank president Masayoshi Son, had been told in July 2009 that the majority of Alipay's shareholding was transferred to a Chinese owner.

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