Yahoo has signed a deal to buy 40% of Chinese online retailer Alibaba.com for $1 billion cash, making it the company's largest investor.
Under the strategic partnership, Yahoo hands over its Yahoo China business to Alibaba, a joint statement said.
'Yahoo is investing $1 billion in cash to purchase Alibaba.com shares from company and other shareholders,' a statement from the two companies said. It added that the deal gives Yahoo a 40% economic interest and 35% voting rights which would make it the largest strategic investor in Alibaba.
The deal is the biggest investment by a foreign company to gain access to China's 100 million net users.
Alibaba, based in the eastern city of Hangzhou, employs some 2,000 staff and operates the online auction site Taobao.com as well as its flagship trading site Alibaba.com. Its online payment system, AliPay, is also competing with eBay's PayPal for dominance in China.
'The combination will create one of the largest Internet companies in China and the only Internet company in China with a leading position in the key growth sectors of business-to-business e-commerce, consumer e-commerce, online payment, communications and search,' the statement said.
Yahoo co-founder Jerry Yang said the deal underscored his company's long-term commitment to China.
'We have always had a long-term commitment to China and even more to the development of its Internet industry,' he said. 'We are confident that Yahoo is putting its resources behind the right management team which operates according to similar values as we do,' he added.
Yahoo first entered the China market in late 2003 by purchasing keyword search firm 3721 Network Software for $120m.
