China’s Alibaba Files for $1 Billion U.S. IPO

Chinese e-commerce giant Alibaba Group on Tuesday filed in the U.S. for an initial public offering to raise up to $1 billion — a figure that analysts expect will rise — which will deliver a cash windfall to minority stakeholder Yahoo.

Yahoo holds a 24% stake in Alibaba, and it;s set to sell a portion of that holding after the Alibaba IPO, according to the agreement between the two companies. Yahoo paid about $1 billion for its original 40% stake in Alibaba in 2005.

Alibaba, founded in 1999, claims it is the biggest e-commerce company in the world. For the nine months ended Dec. 31, 2013, the company generated revenue of $6.5 billion and net income of $2.9 billion. About 84% of Alibaba’s revenue comes from two main websites: Taobao, a consumer-focused e-commerce marketplace, and the business-to-consumer Tmall site.

Alibaba’s IPO is expected later this summer at the earliest.

Analysts have speculated what Yahoo might do with the cash from the Alibaba offering, which will be in addition to the Internet media company’s $4.6 billion cash and equivalents on hand as of March 31, 2014.

One area Yahoo may pursue is bulking up its video business. The company last year launched unsuccessful bids for Hulu and Dailymotion, and CEO Marissa Mayer could be in the market to acquire a YouTube multichannel network.

Last week, Yahoo announced deals for its first TV-length scripted series at its Digital Content NewFronts: “Other Space,” a sci-fi comedy from exec producer Paul Feig, the writer-producer behind NBC’s “Freaks & Geeks” and director of “Bridesmaids”; and “Sin City Saints,” from exec producer Mike Tollin (“Smallville,” “One Tree Hill”) and director Bryan Gordon (“Curb Your Enthusiasm”).

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