Reports: Yahoo Mulling Stake in China's Alibaba

NEW YORK/SHANGHAI – Online media company Yahoo Inc. (YHOO) is in talks to buy a stake in Alibaba.com (search), a Chinese business and consumer e-commerce site, in a move brokered by Japanese investor Softbank Corp., according to media reports.

Forbes.com reported Sunday that Yahoo was considering paying around $1 billion to acquire a 35 percent stake in Alibaba.com.

Alibaba, whose largest investor is Softbank (search), had cash revenue of $68 million last year, more than double the $30 million in 2003.

The company was founded by Jack Ma in 1999, an English teacher turned entrepreneur, as a business-to-business bridge between local Chinese producers and foreign buyers.

Softbank is also the biggest outside shareholder in Yahoo.

A report in the International Herald Tribune cited "people familiar with the talks" as saying that Softbank has played an important role in coordinating Yahoo's discussions with Alibaba.com.

A spokesman for Alibaba.com in Hangzhou, China, declined to comment on the reports. A spokeswoman for Yahoo was not immediately available for comment.

Yahoo shares rose 43 cents, or 1.3 percent, to $33.95 on Nasdaq.

A tie-up between Yahoo and Alibaba would pose a challenge to eBay Inc. (EBAY) in China, where Alibaba competes with the U.S.-based online auction leader through Taobao.com, a consumer-focused auction site.

At the end of last year Yahoo said in its annual regulatory filing that Softbank owned roughly a third of its Yahoo Europe and Yahoo Korea units. Meanwhile, Yahoo owns one-third of Yahoo Japan Corp., which is controlled by Softbank.

The reports follow the spectacular debut of Baidu.com Inc. (BIDU), a popular Chinese Web search company, which had the best first-day performance of any initial public offering by a foreign company on U.S. stock markets Friday.

On Monday, China's version of Google (GOOG) , continued to shoot higher, gaining another $21, or 17 percent, to $143.80.