Alibaba to buy Yahoo's stake on Microsoft acquisition concern

Alibaba.com.Ltd<1688>, a Chinese Internet company in which Yahoo Inc holds a 39% stake, is in advanced talks with investors to finance Alibaba's repurchase of Yahoo's stake, looking to evade the grasp of Microsoft Corp, which is eying to take over Yahoo, sources reported.

Microsoft made an unsolicited offer for Yahoo on Jan. 31 for US$44.6 billion. Despite the rejection from Yahoo's board, many shareholders and analysts believe a deal will go through eventually.

The owner of China's largest trading Web site for companies is now independently controlled by Alibaba's management, led by its founder Jack Ma, despite Yahoo as its largest shareholder. The management is concerned that Microsoft may jeopardize its autonomy and its image as a Chinese company.

Alibaba has hired Deutsche Bank and law firm Wachtell, Lipton, Rosen & Katz for advice on its response, according to sources. It aims to exercise a clause in its 2005 deal with Yahoo that endows its priority to buy back the U.S. company's stake via financing from two leading investors and a group of others, including large Chinese institutions if Microsoft's acquisition happens.

No comments from Alibaba are available to date.