Alibaba settles Alipay dispute with Softbank, Yahoo!

News Broadband China 29 JUL 2011
Alibaba settles Alipay dispute with Softbank, Yahoo!
China's Alibaba Group announced an agreement with its shareholders Yahoo! and SoftBank on compensation for the spin-off of its subsidiary Alipay. Alibaba transferred the online payment service Alipay to a Chinese company controlled by Alibaba chairman Jack Ma in August 2010, a transaction it says was needed to comply with changes in Chinese banking regulations. Yahoo and Softbank disputed the move, saying it reduced the value of their shares in Alibaba. The new agreement secures at least USD 2 billion and up to USD 6 billion in proceeds for Alibaba in the event Alipay pursues an IPO or sale of the company. In addition Alipay will pay Alibaba royalty and software fees for using certain intellectual property and technology. The fees consist of an expense reimbursement and a 49.9 percent share of pretax profit at Alipay and its subsidiaries. The agreement also preserves the existing relationship between Alibaba unit Taobao and Alipay. Alipay will continue to provide payment processing services to Alibaba Group and its subsidiaries (including Taobao) on preferential terms.

Categories:

Internet

Companies:

Softbank,  Taobao,  Yahoo!,  Alipay,  Alibaba

Countries:

China

Tags:

e-Payment, Shareholders & subsidiaries, Licences & sales agreement, M&A buyouts & divestments

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