Chinese Internet firm Alibaba Group Holdings Ltd.(ALBCF.PK) is in talks with Singapore state investment firm Temasek Holdings Pte. Ltd. to help it finance its $7.1 billion stock buyback from Yahoo!, Inc. (YHOO), reports said Monday, citing people familiar with the matter.
If the negotiations are successful, Temasek may provide about $500 million. Temasek already has an investment in Alibaba, which operates China's largest e-commerce website.
Late Sunday, Internet giant Yahoo! reached an agreement to unload its 40 percent stake in Alibaba in three tranches after several failed attempts earlier.
The first tranche of buying back up to 20% stake is expected to close within the next six months. The deal would comprise $6.3 billion in cash and around $800 million in Alibaba preferred stock. The transaction is based on an estimated market valuation of about $35 billion for Alibaba.
The companies then had noted that Alibaba, which runs the site Alibaba.com, intends to finance the repurchase through a combination of its own cash resources, debt, equity and equity-linked financing. However, it will have to repurchase at least 10 percent stake even if financing deal is not reached, and complete the 20 percent repurchase when the requisite financing is obtained.
Of the remaining 20 percent stake, a 10 percent stake will be divested through an initial public offering of Alibaba in future. Alibaba will be required either to repurchase the stake at the IPO price or allow Yahoo to sell the shares in the IPO.
The remaining 10 percent will be disposed by Yahoo with the help of Alibaba following a customary lock-up period after the IPO, at a time that will be chosen by Yahoo.
Sunnyvale, California-based Yahoo acquired the stake in Alibaba in 2005 by paying $1 billion and giving ownership of its Chinese unit.
Alibaba's other shareholders include Digital Sky Technologies and Silver Lake.
Alibaba shares closed Today's trading at HK$13.34 in Hong Kong, up HK$0.02 or 0.15 percent.
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