How Yahoo! Inc. (YHOO) Became A Significant Alibaba Group Holding Ltd (BABA) Investor

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Yahoo! Inc. (NASDAQ:YHOO) is widely known as having a substantial stake in Alibaba Group Holding Ltd (NYSE:BABA). However, not everyone knows how the relationship of the once-mighty internet veteran and the world’s biggest electronic commerce company started.

The link between Yahoo! Inc. (NASDAQ:YHOO) and Alibaba Group Holding Ltd (NYSE:BABA) were discussed in a recent special report by Eunice Yoon on CNBC detailing how the Chinese company grew to become a powerhouse. The report comes as the Alibaba Group is expected shortly to debut on the New York Stock Exchange.

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Long before Alibaba Group Holding Ltd (NYSE:BABA) became as massive as it is, Yahoo! Inc. (NASDAQ:YHOO) has had a link to the company. Yoon said Alibaba generated $248 billion in sales last year. Just for comparison, Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) are said to have generated $110 billion and $76 billion in sales last year respectively.

According to Yoon, Jack Ma, the founder of Alibaba Group Holding Ltd (NYSE:BABA) went to Beijing after his electronic yellow pages company failed to work at a government agency that manages the internet. While working at this agency, Ma was assigned to take Yahoo! Inc. (NASDAQ:YHOO) cofounder Jerry Yang on a tour of the Great Wall of China. From there, the business relationship with Yang and Ma blossomed.

After his stint in the government, Ma founded Alibaba Group Holding Ltd (NYSE:BABA) in 1999 to capitalize on the reputation of China as the world’s workshop, Yoon said. Later in the report, Ma discussed why he created Taobao.com, a direct competitor in China to eBay Inc (NASDAQ:EBAY).

Yahoo! Inc. owns 22.5% of Alibaba Group Holding Ltd. The American company has revealed it will sell 6% of Alibaba when the firm lists at the New York Stock Exchange.

Yahoo! Inc. (NASDAQ:YHOO) investors includes David E. Shaw’s D.E. Shaw & Co., L.P. The hedge fund reported about 16.19 million shares in the internet veteran by June 30 this year.

Disclosure: None

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