2011-06-01 16:35

Yahoo Inc has resolved a dispute with partner Alibaba Group over the Chinese company's transfer of its prized online payments unit to its CEO Jack Ma, two sources close to the matter said.

Yahoo's feud with Alibaba, 43-percent-owned by the US firm, over the Chinese company abruptly transferring Alipay, has knocked Yahoo's shares by about 10 percent since early May.

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, an Alibaba board member, who has been reluctant to come to the negotiating table, the sources said.

A Softbank spokeswoman said the negotiations were still going on and declined further comment.

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

Yahoo claimed it had been blindsided last month by Alibaba's restructuring of Alipay, an online e-commerce payment similar to eBay Inc's PayPal, to Alibaba Chief Executive Officer Jack Ma.

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.

Alibaba and Yahoo declined to comment on the agreement.

A source familiar with the matter said Yahoo is encouraged with the progress of the discussions.

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, to that of PayPal and Ebay Inc. The executive said the "economic arrangement" needs to remain intact in order to create value.