THINGS FALL APART

Yahoo’s Big Trouble in Big China: Report Says Asian Asset Unloading Talks Collapse

carol bartz Yahoos Big Trouble in Big China: Report Says Asian Asset Unloading Talks Collapse

Ousted Yahoo! CEO Carol Bartz would be able to find the right word for today. Too bad she's not around to share it with them.

Yahoo’s problems just got worse. Just recently, they’ve had to can their CEO, their co-founder left, they shut down a chunk of an important original content initiative. And now, a major, important deal for Yahoo just fell apart.

Yahoo’s been trying to unload two major pieces of financial cargo: a massive stake in the Chinese internet monolith Alibaba, and Yahoo! Japan, which have been weighing the beleaguered internet giant’s finances down. It was about to happen in a tax-free transaction, too. But for whatever reason, as Dealbook reports, the deal won’t be going through.

The talks to put together a tax-free transaction, ended on Monday, this person said. It was unclear why, although the pace of negotiations had been exceedingly slow. Completing a deal would still have taken about a month, people briefed on the discussions said previously. Alibaba and Yahoo Japan’s majority stakeholder, Softbank, plan on reaching out to Yahoo’s chief executive to discuss whether an alternative transaction, including one that was not tax-free, is possible, added the person briefed on the matter.

screen shot 2012 02 14 at 2 00 14 pm Yahoos Big Trouble in Big China: Report Says Asian Asset Unloading Talks CollapseOriginally, Yahoo! was thinking about simply cutting back their stake in Alibaba; as the deal moved forward, it began to look like they wanted to unload the entire thing. As a result of the deal falling apart (and as you can see to the left) Yahoo shares have taken a dive. At the time of this writing, shares are down 1.11 (or 6.89%).

What’s this mean for the company?

In December, Alibaba hired a lobbying firm (one also employed by B.P., Goldman Sachs, and Pfizer) to explore the possibility of buying Yahoo if the deal to unload the Alibaba stake fell apart. Why a lobbying firm? Because Americans wouldn’t be too pleased with one of the two largest internet companies in America being operated from China, and producing profit for China while they do it.

Looks like that firm’s about to get pretty busy.

fkamer@observer.com | @weareyourfek

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