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Yahoo Dives Deeply into Chinese Market

Yahoo today announced they were expanding their presence in China as they inked a long term agreement with Chinese e-commerce company Alibaba.com to form a strategic partnership. The Yahoo China brand, as part of the deal, will be rolled up under a new entity.

This new entity, Yahoo said, will consist of Alibaba’s various sites as well as Yahoo China and Yahoo’s interest in 1Pai. This new combination will create one of the largest Internet companies in China. The combined entity will have a four-person board. Management of Alibaba.com will hold two seats, with CEO Jack Ma serving as the board’s chairman. Other directors will include Jerry Yang, Yahoo!’s co-founder and Chief Yahoo!, and a representative from Softbank.

As part of the agreement, Yahoo is investing $1 billion in cash to purchase Alibaba.com shares, giving them 40 percent economic interest with 35 percent voting rights. The overall transaction is valued at more than $4 billion US.

“Yahoo!’s investment underscores our long-term commitment to the Chinese market. We believe the combination of Yahoo! and Alibaba is the best approach for Yahoo! to win in this region,” said Terry Semel, chairman and chief executive officer of Yahoo!. “Together, we will create one of the largest Internet companies in China, and our combined assets will make us the only company that has a leading position in all the key sectors that are driving explosive Internet growth in China such as search, commerce and communications.”

“Teaming up with Yahoo! will allow us to deliver an unmatched range of e-commerce services to businesses and consumers in China,” said Ma. “With the addition of Yahoo! China to Alibaba.com’s business, we’re expanding our services to provide a leading search offering to China’s Internet users. In China, Alibaba.com is winning in B2B, winning in C2C, winning in online payments and now we’re going to win in search.”

“We have always had a long-term commitment to China and even more so to the development of its Internet industry,” said Yang. “We’re confident that Yahoo! is putting its resources behind the right management team, which operates according to similar values as we do, and shares the same vision for providing the most essential and relevant services to consumers and businesses.”

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