China’s Alibaba Said to Consider Reducing Size of Yahoo Acquisition Loan

By Wendy Mock and Mark Lee - Jan 12, 2012 12:10 PM GMT+0700

Alibaba Group Holding Ltd (ALIBABZ). is considering reducing the size of a loan for a potential Yahoo! Inc. (YHOO) acquisition to around $3 billion from the original target of $4 billion in order to use its cash instead, a person familiar with the matter said.

The company is examining a range of funding combinations for various acquisition options related to Yahoo, and a final decision on the size and structure of the loan has not been made, the person said today. Alibaba has about $3 billion in cash, another person said today, declining to be identified because the details are private.

Alibaba and Softbank Corp. (9984) are considering acquisition options related to Yahoo, the largest U.S. Internet portal, three other people familiar with the matter said in December. Yahoo owns about 40 percent of Alibaba, the top e-commerce site in China, and 35 percent of Yahoo Japan Corp.

John Spelich, a Hong Kong-based spokesman for Alibaba, declined to comment when asked about a loan.

Credit Suisse Group AG, DBS Bank Ltd., Deutsche Bank AG and Mizuho Corporate Bank Ltd. are arranging the loan, another three people said on Dec. 15. The banks are seeking to expand the lead lender group to as many as eight because the size of the loan is too large for the four to underwrite themselves.

More lenders will be sought for the lead arranger group, with a particular focus on attracting Chinese banks, even though the size of the loan may be reduced, one of the people said today.

Reuters reported the loan’s potential reduction in the size on Jan. 11.

To contact the reporters on this story: Wendy Mock in Hong Kong at wmock3@bloomberg.net; Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net