Chinese e-commerce giant Alibaba is likely to take its Hong Kong-listed unit private as part of a complex arrangement that would further consolidate founder Jack Ma’s control over the company, while generating cash for Yahoo (NASDAQ:YHOO) and giving it a better foothold in the business.

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The Alibaba Group plans to buy back a part of the 40 percent stake held by Yahoo, currently valued between $13 billion and $14 billion. The group will likely use bank loans to the tune of $3 billion, around $6 billion in cash, and an asset swap to buy back about 25 percent in a tax-free deal for Yahoo. The asset swap will most likely involve Alibaba.com, but may also include other units like Taobao.com, Taomail, Yahoo China, or Alipay.

“Alibaba.com’s share price has been quite bumpy since its listing. Probably taking it private will make it more flexible for the group to do the transformation that it’s going through,” said Wendy Huang, head of regional Internet and media research at RBS in Hong Kong.

Trading in Alibaba.com shares was halted on Thursday due to an imminent announcement regarding its parent company.

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To contact the reporter on this story: Damien Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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