Alibaba's Ma wants Yahoo, has valuation to get it

Summary:Alibaba's Jack Ma can afford to be interested in Yahoo. In fact, Ma probably sees an undervalued asset and a way to play both the Chinese and U.S. markets.

Alibaba CEO Jack Ma said he was very interested in acquiring Yahoo and logistically could pull off an acquisition.

At first, Ma's idea that Alibaba sounds a bit wacky---at least until you match up the valuations.

Speaking at Stanford, Ma said Alibaba was very interested in Yahoo. As AllThingsD's Kara Swisher noted, Ma provided one of the few clear answers to Yahoo watchers.

An Alibaba-Yahoo deal could get complicated, but on the surface Ma has math on his side.

Gabelli Group analyst Brett Harriss said a recent private placement values Alibaba at about $32 billion. At that valuation, Yahoo's 38 percent stake is worth $12.1 billion, or $9.60 a share. Yahoo's market cap through Friday is a mere $16.6 billion. In other words, Yahoo's stake in Alibaba largely justifies the company's existence.

Given the valuations, Alibaba's Ma can afford to be interested in Yahoo. In fact, Ma probably sees an undervalued asset and a way to play both the Chinese and U.S. markets.

Related: CNET: Could Yahoo be acquired by Alibaba?

Topics: Banking, Social Enterprise

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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