Alibaba spins off payment unit without board's OK
Brian Womack, Bloomberg News
Friday, May 13, 2011
Alibaba Group Holding Ltd. spun off its Alipay online-payment business to a different company without the knowledge or approval of its board or shareholders, Yahoo said Thursday.
Yahoo and Softbank Corp., both of which own stakes in Alibaba Group, didn't learn until March 31 of the ownership transfer, which happened in August, Yahoo said. Alibaba transferred ownership of Alipay to a company mostly owned by Jack Ma, chief executive officer of Alibaba Group, in order to comply with Chinese restrictions on foreign ownership of payment services, Yahoo said Wednesday.
The disclosure has weighed on shares of Yahoo amid concern that transferring ownership of the lucrative payment business would make its roughly 40 percent stake in Alibaba Group less valuable. Yahoo uses its stake to benefit from the rising Internet demand in China, where regulation of Web content has made it hard for U.S. companies to do business on their own.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/05/12/BU731JFJTU.DTL
Alibaba is a big player in Internet services, being the original or one of the original Chinese Internet portals to start up in China. The move to separate the money division from the portal business--likely a way for government to control foreign currency flow.
How was the split information conveyed if Yahoo and Softbank found out 6 months after the fact? Might be time to clear the board.