Yahoo is undervalued based on alibaba valuations so instead of passing cash to yahoo they'd essentially be getting exposure and a platform in the US for free using the money it has to give yahoo anyway at the time of IPO. This way the money stays inhouse and they acquire an asset
Here is a suggested plan to implement your idea::
Have Stock price pegged right now at $48.00 perhaps $50 for Alibaba offering
As part of the Alibaba offering--- all Yahoo shareholders would receive
1 Alibaba share for 1 Yahoo share.
Alibaba does not have to come up with any cash to acquire Yahoo.
Yahoo would be a wholly owned subsidiary of Alibaba.
Yahoo shareholders have something worth $48.00 - $50 right
at the closing of the offering---still huge upside from there
(better IMHO to own Alibaba after the offering than Yahoo)
Existing stock (the 22.6% of Alibaba owned by Yahoo-
would of course now be owned by Alibaba, as would
the stock in Yahoo Japan currently held by Yahoo.
These shares would come out of the Yahoo subsidiary and
moved up to the Alibaba parent company---(Alibaba could
retire the 22.6% Alibaba stake formerly held by Yahoo.
It is goog should do it because soon FB will take his place as "king of the Internet" Lately goog is stagnant and not doing to keep up with the competition. I think buying YHOO will enforce goog its place in the leadership.
I don't pretend to know the in and outs of it, what obstacles if any that may prevent this, but it does seem like a good move, they know what they expect their value to be, and they would be getting back almost a fourth of their company and Yahoo Japan and all US Yahoo. They have shown their willingness to make deals now before the IPO.