|[February 21, 2012]
Alibaba Group Proposes Privatization of Alibaba.com
HONG KONG --(Business Wire)--
Alibaba Group (the "Offeror") and Alibaba.com (HKSE:1688) (1688.HK)
today jointly announced that the Offeror has made a proposal to the
Board of Directors of Alibaba.com to privatize the company. The Offeror
and concert parties together hold 73.45 percent of Alibaba.com.
The proposal offers minority shareholders HK$13.50 per share in cash,
which implies a premium of 60.4 percent over the 60-day average closing
price of Alibaba.com shares, and a premium of 55.3 percent over the
10-day average closing price.
The Offeror stated in the announcement filed with the Hong Kong Stock
Exchange today that the offer price will not be increased. Under Hong
Kong regulations, the Offeror will not be permitted to increase the
offer price. Alibaba.com shareholders will in due course be sent a
scheme document and will be invited to vote on the proposed offer. The
Offeror and its concert parties will not be permitted to vote in
relation to the proposed offer. The Offeror further stated in the joint
announcement that it intends to finance the privatization from a
combination of new committed financing and existing cash on hand.
A major factor driving Alibaba Group's decision to privatize its
publicly traded subsidiary, which is engaged in the B2B marketplace
business, is to provide minority shareholders an opportunity to realize
returns while Alibaba.com implements a shift in its business strategy.
Alibaba.com and the Offeror stated in their joint announcement that this
shift could result in slower revenue growth and less earnings visibility
in the short- to medium-term. Alibaba.com's business in the early years
was driven by a focus on rapidly increasing the number of manufacturers,
trading companies and wholesalers that pay a subscription fee to sell
products on the company's marketplaces in order to maximize revenue
growth. Last year, the company implemented a major initiative toward
improvements in the quality of the buyers' experience on the company's
online marketplaces. As a result the pace of adding paying customers has
been slowed down. In previous disclosures, Alibaba.com outlined this
strategic shift, warning investors that despite confidence in the
favorable long-term prospects of these initiatives, there would likely
be a short- to medium-term impact on financial results.
"Taking Alibaba.cm private will allow our company to make long-term
decisions that are in the best interest of our customers and that are
also free from the pressures that come from having a publicly listed
company," said Jack Ma, founder, chair and CEO of Alibaba Group and
Board chair of Alibaba.com. "With this offer, we provide our
shareholders a chance to realize their investment now at an attractive
cash premium rather than waiting indefinitely during this period of
Since November 6, 2007 when Alibaba.com was initially offered to the
public at HK$13.50 per share, the Hang Seng Index has declined more than
27 percent (as of the close on February 20, 2012).
An Independent Board committee of Alibaba.com has been formed to
evaluate the proposal and will work with its own independent financial
advisor to formulate recommendations to independent shareholders. The
recommendation of the Independent Board committee will be disclosed in
the scheme document to be dispatched as soon as practicable.
About Alibaba Group
Alibaba Group is a global e-commerce leader and the largest e-commerce
company in China. Since it was founded in 1999, Alibaba Group has grown
to include the following core businesses: Alibaba.com (HKSE: 1688;
1688.HK), Alibaba Group's flagship company and the world's leading B2B
e-commerce company; Taobao Marketplace, China's primary C2C online
shopping destination; Tmall.com, China's leading B2C online marketplace
for quality, brand name goods; eTao, China's most comprehensive shopping
search engine; Juhuasuan, China's most comprehensive group shopping
platform; Alibaba Cloud Computing, a developer of advanced data-centric
cloud computing services; and China Yahoo!, one of China's leading
Internet portals. Alipay, China's largest third-party online payment
service, is an affiliate of Alibaba Group.
About Alibaba.com Limited
Alibaba.com (HKSE: 1688) (1688.HK) is the global leader in e-commerce
for small businesses and the flagship company of Alibaba Group. Founded
in 1999 in Hangzhou, China, Alibaba.com makes it easy for millions of
buyers and suppliers around the world to do business online mainly
through three marketplaces: a global trade platform (www.alibaba.com)
for importers and exporters; a Chinese platform (www.1688.com)
for domestic trade in China; and a transaction-based wholesale platform
on the global site (www.aliexpress.com)
geared for smaller buyers seeking fast shipment of small quantities of
goods. Together, these marketplaces form a community of more than 76.3
million registered users in more than 240 countries and regions. As part
of its strategy to transition into a holistic platform where small
companies can build and manage their online business more easily,
Alibaba.com also offers Chinese traders a wide array of business
management software, Internet infrastructure services and export-related
services directly or through companies it has acquired including HiChina
and One-Touch, as well as educational services to incubate enterprise
management and e-commerce professionals. Alibaba.com also owns Vendio
and Auctiva, leading providers of third-party e-commerce solutions for
online merchants. Alibaba.com has offices in more than 70 cities across
Greater China, India, Japan, Korea, Europe and the United States.
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