US Internet firm Yahoo! and Japan’s SoftBank said today they had reached

US Internet firm Yahoo! and Japan’s SoftBank said today they had reached agreement with their Chinese partners at Alibaba Group in a dispute over online payments platform Alipay.

Under the terms of the agreement, Alibaba Group, which is 43 percent owned by Yahoo!, will “continue to participate in Alipay’s future financial performance, including a future IPO or other liquidity event,” they said.

Alibaba Group will receive no less than $2 billion and no more than $6 billion from an initial public offering or sale of Alipay, which is the payment platform of Alibaba Group, the companies said in a joint statement.

Alipay will continue to provide payment-processing services to Alibaba Group and its Taobao marketplace, China’s top online retailer, they said.

Alipay will also pay a royalty and software technology services fee to Alibaba Group made up of expense reimbursement and a 49.9 percent share of the consolidated pre-tax income of Alipay and its subsidiaries, they said.

Alipay is currently only “marginally profitable,” according to company officials.

Alibaba Group is one of the most prized assets of Yahoo! and the dispute had shaken the troubled US Internet company, which was a giant in the 1990s but now faces tough competition from Google and others and deep investor skepticism.

The dispute became public knowledge in May when Yahoo! notified US regulators that ownership of Alipay had been shifted to a Chinese firm owned mostly by Alibaba chief executive Jack Ma.

The conflict had raised questions about Chinese corporate governance practices and the security of foreign investment in China.

Yahoo! said the transfer was done without the knowledge or approval of Alibaba’s board of directors or shareholders, which also include SoftBank.

But Ma has insisted that Yahoo! and SoftBank were informed of the transfer of ownership and it was done to comply with Chinese licensing regulations.

Source AFP