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Could Yahoo be acquired by Alibaba?

The CEO of the Chinese Internet company says he's very interested in buying his American counterpart.

Jim Kerstetter Staff writer, CNET News
Jim Kerstetter has been writing about the high-tech industry since the 1990s. He has been a senior editor at PC Week and a Silicon Valley correspondent at BusinessWeek. He is now senior executive editor at CNET News. He moved back to Boston because he missed the Red Sox. E-mail Jim.
Jim Kerstetter
2 min read
We now know Yahoo has at least one more suitor, the Chinese Internet company Alibaba.

Alibaba CEO Jack Ma told an audience at Stanford University on Friday that he's interested in acquiring Yahoo, according to published reports. Ma also said he's been approached by several private equity firms and others about his interest.

Alibaba adds to a growing list of parties that may be interested in Yahoo, including the private equity firm Silverlake Partners, the venture capitalists Andreessen Horowitz, and even Microsoft, which already tried and failed to acquire Yahoo. Yahoo officials have been careful to note they are merely looking at alternatives for the company's future and haven't declared they want to sell.

Indeed, despite its recent troubles, Yahoo won't come cheap if someone does buy it since the company still has a $16.63 billion market capitalization. It's a far cry from the $44.6 billion offer Microsoft once made, but still a considerable price for even the biggest suitors.

Alibaba's interest is an intriguing turn of events. Yahoo acquired a 40 percent stake in Alibaba several years ago, and that investment may now be worth up to a third of Yahoo's total value. Ma has repeatedly pressured Yahoo's board to sell that stake back to him but has so far been rebuffed. But Yahoo's board, while searching for a replacement for recently fired Chief Executive Carol Bartz and looking at the proverbial "strategic alternatives," may be more agreeable to a range of options right now.

Yahoo's problems in China are well documented. Four years ago, Yahoo co-founder Jerry Yang was roundly criticized in congressional hearings for the role his company played in the jailing of a Chinese human rights activist.

"Look into your own soul, and see the damage you have done to an innocent human being and his family," Rep. Tom Lantos (D-Calif.) said at the hearing. "It will make no difference to the committee what you do, but it will make you better human beings, if you recognize your own responsibility for the enormous damage your policies have created."

That Yahoo could end up being acquired by a Chinese company could ring alarm bells with human rights advocates and even lawmakers with long memories.