Companies reach Alipay agreement
Updated: 2011-07-30 09:52
By Hugo Miller (China Daily)
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TORONTO - Alibaba Group Holding Ltd reached an agreement with shareholders Yahoo! Inc and Softbank Corp over the spinoff of its Alipay unit that will give Alibaba as much as $6 billion if the business sells shares to the public.
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Hong Kong-based Alibaba transferred Alipay, China's most- popular online-payment service, to a Chinese company controlled by Alibaba Chairman Jack Ma in August 2010, a transaction that wasn't ratified by Alibaba directors. Ma said earlier this month that Yahoo and Softbank and Alibaba would receive "very large" compensation for the loss of the unit, according to an interview with the China Entrepreneur magazine.
Yahoo, the biggest shareholder in Alibaba, said in May that it wasn't informed until March 31 about the transfer of Alipay equity to Ma's company. Ma previously said Alibaba's board had discussed for three years the need to reorganize Alipay to comply with China's restrictions on foreign investment in payment operators, and that the spinoff was "transparent" and "legal".
As part of the agreement announced on Friday, Alipay will continue to offer payment services to Alibaba on preferential terms, the companies said. Alibaba will also license patents and technology to Alipay, for which Alipay will pay royalties.
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