China's Alibaba is seeking investors to buy the 39 percent stake in the Internet company held by Yahoo, a person with direct knowledge of the situation said on Tuesday, outlining a plan to stop Microsoft from getting the Alibaba stock.
The Chinese company thinks Microsoft is likely to win its $42.4 billion bid to buy Yahoo , and in that case, Alibaba would prefer increased independence, the person said.
Alibaba believes a 2005 agreement with Yahoo gives it a "right of first offer" to buy Yahoo's stake, which would be invoked if Microsoft buys Yahoo, the source said.
Meanwhile, Yahoo's top three executives, Chief Executive Jerry Yang, President Susan Decker and Chief Financial Officer Blake Jorgensen, have begun a roadshow to shore up support with major U.S. institutional investors and prove the Microsoft offer is too low, a source familiar with the plan said.
Yahoo declined to comment on the Alibaba talks and Microsoft was not immediately available for comment.
Alibaba has hired Deutsche Bank and law firm Wachtell, Lipton, Rosen & Katz as advisers, the person said.
Under a 2005 deal, Yahoo merged its Chinese operations into Alibaba in exchange for the 39 percent stake in Alibaba Group, which Yahoo continues to hold.
Late last year, Alibaba spun off an interest in its core business-to-business e-commerce site, Alibaba.com Ltd, which held a successful initial public offering on the Hong Kong stock market.