Yahoo to buy 10% of shares in Chinese Web firm’s IPO

Yahoo Inc. said Tuesday that it would buy 10% of the shares in the Hong Kong initial public offering of Alibaba.com Ltd., the business-to-business unit of China’s biggest online retailer, according to a preliminary document.

Alibaba.com Ltd. and parent Alibaba.com Corp. will offer a combined 858.9 million shares in the sale, or a 17% stake in the unit that helps businesses buy and sell products to one another, according to the document. Pricing and allocation of the shares is scheduled for Oct. 26, with the stock’s listing slated for Nov. 6.

Yahoo, already the owner of a 40% stake in Alibaba.com Corp., wants to boost earnings in China, the world’s second-biggest Internet market by users. The decision by the owner of the most-visited U.S. website to buy shares in the offering might help draw other investors.

“Yahoo is showing commitment to Alibaba for the listing,” said Duncan Clark, managing director of Beijing-based researcher BDA China Ltd. “It could turn into a very shrewd financial move for Yahoo. There is a real hunger right now for China stocks.”

Alibaba.com Ltd.’s IPO might raise $1 billion, people familiar with the situation said. The share sale would be the largest initial offering by a Chinese Internet company, according to data compiled by Bloomberg.

Yahoo swapped $1 billion and its China unit for the 40% stake in Alibaba.com Corp. in August 2005.

About 73.5% of the shares on offer will be sold by Alibaba.com Corp., the document said. The rest are new shares to be issued by Alibaba.com Ltd.