Chinese e-commerce company Alibaba.com's shares surge on $2.5 billion privatization bid

HONG KONG - Shares of Alibaba.com rocketed on Wednesday after the Chinese e-commerce site said its parent company made a $2.5 billion privatization bid as part of a shift in business strategy that also includes plans to buy back a stake from Yahoo Inc.

Alibaba.com shares soared 42 per cent to 13.18 Hong Kong dollars in morning trading after Alibaba Group Holding Ltd. offered Tuesday to buy all the shares of the popular business-to-business website it doesn't already own for HK$13.50 each. The offer could cost up to HK$19.6 billion ($2.5 billion).

After years of rapid growth, Alibaba.com expects to add paying customers at a slower rate so it is now focusing more on improving the experience of existing manufacturers, wholesalers and trading companies that use the site. That could hurt financial results, the companies said.

"Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company," founder and Chairman Jack Ma said.

Alibaba said the "depressed" share price is also having an "adverse impact" on business, its reputation with customers and employee morale. Taking the company private would eliminate that problem.

Yahoo owns about 40 per cent of Alibaba Group, which in turn owns about 73 per cent of Alibaba.com.

Alibaba Group has been negotiating with Yahoo to buy back its stake but those talks have stalled over the terms. The company noted that it is in talks with Yahoo to "restructure" its holdings in Alibaba Group but said the privatization offer isn't conditional on that deal's completion.

___

Follow Kelvin Chan at twitter.com/chanman