Alibaba has say in Yahoo, Microsoft talks: source

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Based on the original agreement with Yahoo, which owns 39 percent of Alibaba, the Chinese company is in a very strong position to influence how shares would be transferred to any new owner, said the source, who is close to Alibaba.

The problem is a perception by Beijing authorities that an important Chinese firm could come under the control of Microsoft Corp, which has a reputation of using monopolistic tactics, said the source, who is familiar with a team of bankers and lawyers assembled by Alibaba to review its options.

Officials at Alibaba declined to comment.

Yahoo is the Chinese company's largest single shareholder, but Alibaba's management - led by founder Jack Ma - has retained effective control over its operations.

Microsoft on January 31 made an unsolicited offer for Yahoo - then valued at $44.6 billion - which Yahoo's board has rejected.

Alibaba has not been involved, however, in any talks between Microsoft and Yahoo, but would get involved as negotiations get more serious, the source said.

Alibaba's management is assuming the deal will eventually go through, he said.

Alibaba - which runs Yahoo's China operation as well as other Web businesses, including Alibaba.com Ltd, the country's largest listed Internet firm - would need assurances of management control if Microsoft's bid were to succeed, he said.

Foreign control of large companies in key or strategic industries is a politically sensitive issue for Beijing, which has forced many prospective buyers to cut their intended stakes or simply delayed the application process indefinitely.

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