Yahoo is in the final day of talks with Chinese e-commerce player Alibaba.com to acquire a 35 percent stake for $1 billion and all of Yahoo's China operations, reports Reuters. The deal would combine Alibaba's business-to-business and consumer online auction sites with Yahoo's search operations, China's second largest after Baidu.com, creating an e-commerce giant in the world's largest state. If the deal goes through, Yahoo would cease operating its own business in China.
Based in the eastern city of Hangzhou, Alibaba's local operations include a business-to-business e-commerce site; an online auction site called Taobao that competes with eBay in China; and a recently launched online payment system called Alipay. Yahoo's main business in China consists of search service, which it established two years ago with the purchase of local search site 3721.com.
The New York Times writes that Alibaba's primary business is matching the needs of Chinese and foreign companies - for example, providing T-shirts or ball bearings made in China to retailers or manufacturers abroad.
Major player Microsoft, Yahoo, Google, eBay and Amazon.com have been scrambling to invest money or find partners in China, which has some 100 million internet users and a population of 1.3 billion, and is expected to overtake the U.S. in the number of web surfers within five years.
Shares of Baidu skyrocketed 354 percent Friday after its initial public offering on Nasdaq. It is now China's most valuable technology company, with a market value of $4 billion.
