Finally. We just received word from Alibaba that the long-standing dispute over Alipay, its online payment system, between Yahoo, Alibaba, and Softbank has finally settled.
Alibaba’s head Jack Ma had spoken at AllThingD conference two months ago where he briefly discussed the Alipay issue. Nonetheless rumors arose on a number of occasions that the issue between Yahoo and Alibaba had been resolved, but requiring the approval of Softbank, no agreement came about until now.
The agreement breaks down as follows, as per Alibaba’s announcement:
The agreement preserves the existing relationship between Taobao and Alipay. Alipay will continue to provide payment processing services to Alibaba Group and its subsidiaries (including Taobao) on preferential terms.
Alibaba Group will license to Alipay certain intellectual property and technology and provide certain software technology services to Alipay and its subsidiaries. Alipay will pay to Alibaba Group, prior to a liquidity event, a royalty and software technology services fee, which consists of an expense reimbursement and a 49.9% share of the consolidated pre-tax income of Alipay and its subsidiaries.
Alibaba Group will receive no less than $2 billion and no more than $6 billion in proceeds from an IPO of Alipay or other liquidity event. The exact proceeds to Alibaba Group will be determined by multiplying the total equity value of Alipay by 37.5 percent, subject to the foregoing floor and ceiling amounts.
The agreement states that “Alibaba Group will continue to participate in Alipay’s future financial performance” which could mean anywhere from two to six billion dollars for the company if there is a future IPO or ‘liquidity event.’
Yahoo hosted a conference call with both Alibaba Group and Softbank at 8:45am EST today (just starting as we publish this). Neither Jack Ma, Carol Bartz, nor Masayoshi Son were present on the call, but for those who want to listen the live webcast can be viewed via Yahoo’s Investor Relations website. Instructions on how to hear an audio replay can be found here.
Despite being embroiled in the controversy, Alibaba has managed to keep busy of late. Last month we reported that Jack Ma had decided to divide Taobao up into three subsidiaries, Taobao Marketplace, Taobao Mall, and eTao. And just this month the company brought mobile bar code payments to its Alipay apps, a feature that will likely come in handy in its new mobile operating system Aliyun which was confirmed just yesterday.
[With contributions from Willis Wee, Steven Millward]
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