Why The Alibaba Group May Buy Yahoo! Inc. (YHOO): Mia Saini

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Why The Alibaba Group may end up buying the whole of Yahoo! Inc. (NASDAQ:YHOO) was reveal by Bloomberg’s Mia Saini in a recent discussion on “Bloomberg Market Makers”.

According to Saini who noted that The Alibaba Group will have an extra $8 billion in cash after their initial public offering which they can use to buy companies. If the Chinese electronic commerce giant borrows money, it will likely have $50 billion to spend on acquisitions among other things.

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Later in the discussion, it was noted that Yahoo! Inc. (NASDAQ:YHOO) can be considered a possible takeover target for The Alibaba Group. According to the Bloomberg correspondent, this does make sense for the Chinese company because it will essentially be buying back its shares.

Particularly, the move may be favored by the management of The Alibaba Group because Saini said that sources in Hong Kong have told her that the company’s management wants to get rid of Yahoo! Inc. (NASDAQ:YHOO) as an investor. However, the Bloomberg panel noted that this scenario hinges on whether the internet commerce giant wants what is inside Yahoo.

Yahoo! Inc. (NASDAQ:YHOO) has a 22.5% stake, or about 524 million shares, in The Alibaba Group. Yahoo! Inc. has revealed that it will be selling 6% of The Alibaba Group shares at the upcoming initial public offering.

Saini added in the discussion that if the Chinese company buys the American internet veteran, Yahoo! Inc. will not have to pay taxes for the stake in Alibaba that it will be selling.

Meanwhile, other possible acquisition targets for The Alibaba Group includes Snapchat, Inc., Roku, Inc., Lions Gate Entertainment Corp. (USA) (NYSE:LGF) and Akamai Technologies, Inc. (NASDAQ:AKAM).

John Thaler’s Jat Capital Management is an investor in Yahoo! Inc. (NASDAQ:YHOO). The hedge fund reported about 8.85 million shares in the internet veteran by the end of the second quarter of the year.

Disclosure: None

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