Alibaba hires US lobby group for potential Yahoo bid
Alibaba Group has hired Washington lobbying firm Duberstein Group in what is seen as evidence that the company is considering a bid for all of Yahoo if negotiations to buy back the US firm’s Asian assets fail.
Softbank Corp., a shareholder in Alibaba and its putative partner in acquiring the assets, is listed as an affiliate of Alibaba in a disclosure made by the lobbying firm, Reuters reported. Wachtell, Lipton, Rosen & Katz, a law firm specializing in M&A, is listed as the intermediary between Alibaba and Duberstein Group.
Yahoo owns 40% of Alibaba and 35% of Yahoo Japan - with Softbank holding most of the remainder - and the two Asian companies have bid around $17 billion for both stakes. This is the first time Alibaba has registered to lobby the US government and it suggests the firm is constructing backup plans that would see it bid for Yahoo in its entirety, possibly in conjunction with some private equity players.
Duberstein Group is headed by Kenneth Duberstein, White House chief of staff under President Ronald Reagan, and counts BP America, Goldman Sachs and Pfizer among its clients.
Yahoo's stake in Alibaba was valued at $13 billion last September but the Chinese firm wants to pay less than that, saying that tax savings would justify the discount.
Alibaba proposes creating a subsidiary into which it would put cash plus an asset that Yahoo wants to buy. The US firm would then exchange 25% of its Alibaba holding for the stock of this subsidiary. Under US tax law the transaction wouldn't be considered a sale, so no taxes could be levied on it. Softbank wants to use a similar structure to acquire all of Yahoo's interest in Yahoo Japan.
A divestment of the Asian assets would strengthen Yahoo's position in negotiations with private equity firms looking to buy into the main company, but pricing appears to remain an obstacle.
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