Yahoo! in talks on $8b Japan exit

16:26, March 03, 2011      

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Yahoo! Inc is in advanced talks to leave its Japanese joint venture in an effort to sort out its dysfunctional Asian partnerships and free up as much as $8 billion to fight for ground with Google and Facebook.

A deal to transfer Yahoo!'s 35 percent stake in Yahoo Japan to Softbank Corp, which already controls 42 percent of the unit, could come within a few weeks, sources with knowledge of the discussions said.

If a deal is reached, Yahoo! is likely to turn its attention to China, where it owns about 40 percent of prominent Internet company Alibaba Group, the parent company of Alibaba.com, the sources said.

Relations between Yahoo!, Softbank and Alibaba have soured in recent years with Alibaba founder Jack Ma agitating to buy back Yahoo!'s stake in his company and Softbank founder and major shareholder Masayoshi Son openly attacking Yahoo!'s track record as an innovator and its approach to international markets.

Softbank, which also owns a stake in Alibaba, said in a statement released through the Tokyo Stock Exchange that it was not in talks with Yahoo! and had no intention of buying its stake in the Japanese business.

A straightforward sale of Yahoo!'s stake in Yahoo Japan, worth around $8 billion at market prices, is unlikely for tax reasons and the parties are exploring other structures, sources said. A deal has not yet been reached and could yet fall apart.

"If finalized, it means Yahoo! Japan will completely be under Softbank's umbrella," said Makoto Kikuchi, chief executive officer at Myojo Asset Management Japan. "Yahoo! Japan will likely strengthen its Internet and cell phone content businesses so there will likely be synergy."

A deal for Yahoo!'s stake in the mature Japanese market could bring a cash infusion that could attract investors, analysts have said.

An Alibaba spokesman declined to comment on Yahoo!'s intentions in China.

Estimates of the value of Yahoo!'s stake in Alibaba have ranged from $4 billion to $10 billion, meaning as much as 80 percent of Yahoo!'s market value is tied up in its Asian assets.

Source: Global Times/Agencies
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