While Yahoo! Inc. (NASDAQ:YHOO) is considering to sell its core internet business, Alibaba Group Holding Ltd (NYSE:BABA) seems not likely to purchase it. Alibaba is also not interested to buy Yahoo Japan Corp.
Alibaba would only be interested in repurchasing Yahoo’s Alibaba stake if it came at a steep discount which increased Alibaba’s earnings per share. Alibaba would not buy the stock back by cash, because it will reduce free cash flow and limit strategic extend in Europe. According to latest earnings report, Alibaba announced that they have $16.6 billion in cash, cash equivalents and short term investments.
Piper Jaffray analyst Gene Munster believe that a duty free of Alibaba stake spin off by Yahoo could have a good impact of as much as a $12 on its stock price. He said this kind of decision will come early next year.
Alibaba has been investing aggressively against domestic competition which came from Internet giant Tencent Holdings Ltd. and e-commerce retailer JD.Com Inc. (ADR) (NASDAQ:JD). The company has invested money to bring outsides merchandise to Chinese customers.
Alibaba’s recent move also showing appetite for control media platforms. For example, the company purchased Chinese online video provider Youku Tudou Inc. (ADR) (NYSE:YOKU) last month at price of $4.4 billion. Recently, Alibaba is preparing buy a controlling stake in SCMP Group Ltd. which is the publisher of the South China Morning Post newspaper in Hong Kong. The South China Morning Post is the largest English language newspaper in Hong Kong.
If Alibaba buys anything that remains after Yahoo’s core business is sold, that would leave it owning a big part of Yahoo Japan. However, even this remains will still make profits for Alibaba, because the company has recently been cooperating with Yahoo Japan to bring more Japanese merchandise to Chinese customers.