Yahoo, Alibaba reach agreement over Alipay: Sources

Yahoo Inc has resolved a dispute with Alibaba Group over the Chinese company's transfer of its online payment system Alipay to Chief Executive Jack Ma, two sources close to the matter said.

The two companies reached an agreement before Yahoo's analyst meeting last Wednesday, one of the sources said. But the deal requires the consent of Softbank Corp founder Masayoshi Son who is an Alibaba board member, and he has been reluctant to come to the negotiating table, the sources said.

The agreement comes on the heels of escalating tensions between Yahoo, which owns 43% of Alibaba, and the Chinese company over the change of ownership of Alipay to CEO Ma. The transfer resulted in heated contradictory volleys between Yahoo and Alibaba over the timing of the disclosure.

Yahoo claimed it had been blindsided by the deal, while Alibaba countered that Yahoo was aware of the transaction by virtue of having a board seat now held by former Yahoo Chief Executive and director Jerry Yang.

Spokesmen for Alibaba and Yahoo declined to comment on the agreement. Softbank was not immediately available for comment.

Terms of the agreement include points made during Yahoo's analyst meeting last week, according to the sources. Yahoo Chief Financial Officer Tim Morse said the company was still in negotiations with Alibaba and laid out a framework for a deal involving compensation and value of Alipay.

Morse likened the relationship between Alipay and Taobao, the largest online shopping website in China and a subsidiary of Alibaba and Yahoo Japan Corp, to that of PayPal and Ebay Inc. The executive said the "economic arrangement" needs to remain intact in order to create value.

Yahoo's stake in Alibaba and its 35% ownership in Yahoo Japan are considered the US Internet company's most valuable assets. Softbank holds a major stake in Alibaba and also 42% of Yahoo Japan.

Many Yahoo investors consider Alibaba and Yahoo Japan to represent most of Yahoo's value.

Shares of Yahoo closed up 3.31% at USD 16.55 on Nasdaq