Yahoo And Alibaba Enter Negotiations, Alipay Spun-off

Yahoo and the Alibaba Group are engaged in ‘productive negotiations’ over the spinning off online payments company Alipay.

Yahoo, who owns 43 percent of the China based Alibaba Group, earlier said that the company had decided to spun-off its online payments company to another company without the knowledge of the board members and the shareholders.

“Yahoo continues to work closely with Alibaba and Softbank to protect economic value for all interested parties,” Yahoo said in a statement as reported in The Register.

“We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders.” the company added.

The news caused Yahoo shareholders to send its stocks down as they feared that the move would weaken the control of the company over the Alibaba Group.

Yahoo had said in a regulatory filing that the Alibaba Group had transferred the Alipay service to a company that was mostly owned by the group’s chief executive officer Jack Ma. The move was stemmed from restrictions imposed by China over foreign ownership of payment services.

Analysts also believe that with the online payments system gone, the company would be less valuable to Yahoo. Yahoo’s ownership in the company provided it with a backdoor into the growing Chinese internet market. Foreign companies find it hard to operate in China owning to the regulations imposed by the government.