HONG KONG (Reuters) - Chinese e-commerce company Alibaba Group Holding Ltd has decided to hold an initial public offering in New York after talks with Hong Kong regulators broke down over a listing in the Asian financial hub, two sources familiar with the discussions said on Wednesday.
"We've come to the end of dialogue with Hong Kong and we're pivoting to the U.S. to start the listing process," a company source familiar with the discussions said.
Alibaba has engaged U.S. law firms to start working on its IPO and will soon be hiring banks to manage the listing, added the company source, who was not authorized to speak publicly on the matter.
Officials at Alibaba and the Hong Kong stock exchange declined to comment.
An interview with David Webb:
Alibaba will opt for a US IPO listing over Hong Kong, but it is a close call. I know there’s a lot of pressure on Hong Kong to back down now but I don’t think they will. They know they can’t without weakening their governance system for every other company. So, my guess is that Jack Ma will just accept the risk of litigation in the US and go there. You know it might even work out better for them. They might have more American analysts following them which might help their valuation. Alibaba’s management will still have to figure out how to “manage” their remaining large shareholders – SoftBank and Yahoo YHOO +3.7%! – even with a dual-class listing. Would they accept being second-class shareholders, or would they want super-voting shares too?
Somewhere out there, Yahoo co-founder Jerry Yang must be shouting his company’s name for the first time in years.
That’s because Yahoo closed above $31 a share–by three pennies–for the first time since October 2007, a few months before Microsoft made a blockbuster offer to buy the company for that same price per share. And for all that current CEO Marissa Mayer has done to revive the long-dormant company, it’s finally worth giving Yang due credit for Yahoo’s stock success for the past year–not to mention its very existence.
Yahoo is getting closer to propelling its stock beyond the price that Microsoft offered to buy the Internet company in 2008, a feat that seemed unattainable until Yahoo hired Marissa Mayer as its CEO last year.
The stock crossed a symbolically important milestone Thursday when it topped $30 for the first time since February 2008, when Yahoo co-founder and then-CEO Jerry Yang was drawing up ways to fend off an unsolicited takeover bid from Microsoft Corp. that was later withdrawn after several months of fruitless negotiations.
Yang insisted that Yahoo Inc. would be worth more than the $31 per share that Microsoft initially offered, and didn't waver even after the bid was raised to $33 per share. After Microsoft scrapped the proposed deal, Yahoo's stock sank into a prolonged slide. The price fell as low as $8.94 under the direction of five different CEOs, before Mayer defected from a top executive job at Google Inc. in July 2012.
Hear them out:
Alibaba’s C2C and B2C platforms, Taobao.com and Tmall.com, have at least 70% of China’s total market. They are worth $81 billion, or about 35 times 2014 forward P/E, or about one time forward PEG (they assume 30-40% annual revenue growth rate). This is not expensive. Amazon.com (AMZN), for example, trades on average at 2.6 times in the last five years, according to Factset.
Alibaba also owns alibaba.com, a B2B site that has about 40% market share in China. ABR gives it 25 times 2014 forward P/E, assuming 20% future revenue growth, and values it at $12 billion.
eTao is a search engine and is valued at $12 billion, using Baidu (BIDU) and Qihoo 360 (QIHU)’s trading multiples as benchmarks.
We already have $100 billion market cap here. But wait, Alibaba has more assets.
Juhuashuan.com is a groupon-like shopping platform. It is valued at $3 billion, using Renren (RENN)’s group buy business, Nuomi, as benchmark.
Alipay is like China’s Paypal. It is valued at $4 billion. There is also Sina (SINA)’s Weibo (China’s Twitter) investment ($1 billion), investment in mapping services AutoNavi (AMAP) ($300 million), and stake in mobile browser UCWeb ($3 billion). In total, ABR Investment thinks Alibaba is worth $117 billion.
Mayer said, Yahoo is seeing 800 million monthly active users outside of its recent acquisition of Tumblr. She said Yahoo’s seeing “a lot of additional usage on mobile” as well as the home page, mail, and search. The company remains focused on “daily habits” of users. Yahoo trades up in after hours trading.
Marissa Mayer Tech Crunch Speech Live on CNBC at 5:00 EDT
The new app was built in New York by an engineering team led by Robby Stein, whose expertise was imported last October when Yahoo bought his startup, Stamped, for an undisclosed amount. It marked the first of about 20 acquisitions that Mayer has made as Yahoo's CEO and reunited her with Stein, who had previously worked with at Google before launching his startup.
Yahoo is auditioning for a bigger role on iPhones and iPads with the release of its first mobile application tailored for watching video on touch-control screens.
The app, called Yahoo Screen, is set up to make the experience of sifting through video on smartphones and tablet computers more like channel surfing on a television. Instead of relying on a TV remote control, users of the Yahoo Screen app unveiled Monday will use their fingers to flip through different programs and sort through roughly 20 different channels separated into categories such as celebrities, sports, games and food.