Wednesday, 9 December 2015

Yahoo and Alibaba

Sometimes things are not as they seem.

The world business news is full at the moment of the news that Yahoo is to sell itself, or split itself up or not. All so it can realise the value for shareholders in its stake in Alibaba - the chinese export portal ( I never understood this success, everything I have ever looked at in Alibaba is 100% fraudulent, must just be me who see this).

As with many things mergers and acquisitions in 2015, the whole deal is really about corporate tax avoidance. Somehow or other Yahoo wants to avoid paying any corporate tax on a $35 billion share sale and has come up with various different ways to make this happen. The latest one is the to do the opposite of the last idea but for the same result, paying no tax.

Pfizer/Allergan is the same side of the coin, with a completely real merger created not to drive synergies but save taxes.

Ho hum to all that.

The really interesting thing I have learned though, although can find precious little English language backing, is that Yahoo does not actually own Alibaba shares. Yahoo owns shares in the Hong Kong Listing of Alibaba, which in turn owns the US listing shares. According to Yahoo it owns 35% and has major voting rights. One piece of evidence I can show to prove all this is it took 2 years for Yahoo to increase its stake in Albibaba which is put down to 'deal complexities.'

In reality, the entity listed on the Hong Kong exchange is not the company that owns Alibaba group of companies. It is instead a special purpose vehicle that owns the commercial rights to those companies and thus the profit cashflow.

So to some extent, so what. However, would you be pleased to think you owned a chunk of Tesco plc only to discover that you did not. You owned an SPV with commercial rights. What would happen in a country with limited law around property rights if the actual owners decided not to pay the SPV?

Just as well China has such a developed and transparent legal system so that this may never be tested.


Steven_L said...

everything I have ever looked at in Alibaba is 100% fraudulent, must just be me who see this

I haven't dared order off it either. Aliexpress reviews all say the same things.

But what about Facebook? I'm inundated with ads for counterfeit clothing on there. Somehow, FB knows what I have searched on google / what websites I have looked at, then decided to target me with paid for adverts from criminals.

If it's not counterfeit goods, it's inertia selling (i.e pretending you've subscribed to something when you really on agreed to a free trial and paid £1.99 for delivery) of misdescribed foods supplements and cosmetics.

We all know Alibaba / Aliexpress is a scam, but how much of FB's money is made through crime?

MyHolyFuckThisIsDumbName said...

"Somehow, FB knows what I have searched on google / what websites I have looked at, then decided to target me with paid for adverts"

Dear Jesus. Happy Birthday n'all that - but, seriously .... how do you allow people like this to exist?

"...but how much of FB's money is made through crime?" - none of it. None pf their money is made through crime. You signed up for this shit without knowing what you were doing or who your information would be sold to?
What sort of flying fuckarse dipshit wonderland do you live in?

I'm sure you'll come back with a witty riposte, claiming your post is ironic, or somesuch, but it clearly shows you ahvent a fuckign clue what youre doing on the internet.

I'd like to know know how much London Banking and Property money is made through crime. And not just 'ordinary' crime but population-culling, ethnic-cleansing, Nazi-style resource-extraction and population-extermination crime.

"Somehow, FB knows ......what websites I have looked at"
This is about the dumbest thing I have read on the internet. Since forever.
I'm gonna post this all over the web; Generation defining Internet Meme, here I come.

Anonymous said...

Bit harsh.

Steven_L said...

I think you'll find ripping off trade marks is a crime, in the UK and the USA. Facebook takes paid for adverts from people who sell fake goods. The adverts for fake goods far outnumber the adverts for genuine goods. Facebook is therefore involved in, and profiting from 'crime'.

CityUnslicker said...

Yup, SL is right. If companies are advertising fake goods then they are complicit. It is called be an accessory or party to...same as if you unwittingly buy a stolen car

Alibaba has some very fake stuff on it, but it is from China at least where there are NO ACTUAL LAWS against counterfeiting or protecting intellectual property rights. So oddly, they are not committing crie where Facebook may well be...

Bill Quango MP said...

i buy from dhgate Sometimes.
If it's a brand, then it's a 90% certainty it's fake. And some of the stuff we had in was such poor quality it didn't survive unboxing. No money back..all a loss.

But for unbranded, everyday, pound shop type items, you are getting ( mostly) the same items you get in the uk shops.
Screwdrivers and nail files and picture frames and so on.

It's a hit and miss way of buying. One year we couldn't get reading glasses in the uk. Not fashionable ones. So brought from the website. First time, was brilliant. Bargain! Next time, different supplier, total junk. Not worth the cost price.

It's very much buyer beware.

Jan said...

Re FB knowing which sites you've looked's not only what I've looked at but also what my FB "friends" have looked at which comes up on my screen. I wonder if this is in breach of the data protection act as the default setting seems to be to share things unless you opt out. I wonder how many people know this.

I'm aware of it as my FB friends number only 5 (boo boo hoo...not) ie it's only my closest family members and I know what they are likely to be looking at/members of etc. By the way I have no interest in adding to my "friends".

andrew said...

I was initially sceptical of the business itself but reading the comments in
this article on alibaba by bronte capital reminds me how much I do not know.

On dont own Alibava you own an SPV, well, what thunderbirds fan wouldn't want to own an SPV?

Y Ddraig Goch said...

"what thunderbirds fan wouldn't want to own an SPV?"

All of them. SPV's came from Captain Scarlet, which replaced Thunderbirds on TV. That was 1967 and I'm still not over it.

A Non said...

Strangely, Facebook shows me adverts based on browsing history, location, and other apps on my phone. Bit of a mystery there.

Saying China has no IP rights is a bit like saying that France has no private property.....

Interesting about the ownership structure. In England, of course, the courts would surely look at the result rather than the structure. Our system is rather good, which is why so much of this stuff gets done here. I wonder how easy it is to enforce a contract in China?

Anonymous said...

Really A Non ?

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CityUnslicker said...

A non - it will be very interesting if one day the owners of Alibaba cancel their agreement. what on earth would happen?

A Non said...

Yes, it would be interesting to know what the agreements actually said. Presumably Yahoo satisfied itself that they were acceptable.