Business  » Corporate

Chinese online giant Alibaba Tuesday said it plans to take private its Hong Kong-listed portal Alibaba.com for $2.3 billion, as the firm posted a drop in quarterly profits amid a sluggish global economy.

The group, which is 43 per cent owned by Yahoo!, said it was offering HK$13.50 ($1.75) per share for Alibaba.com -- the price at which the unit was listed in 2007, the group said in a statement to the Hong Kong Stock Exchange.

"Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company," said group chairman Jack Ma.

"With this offer, we provide our shareholders a chance to realise their investment now at an attractive cash premium rather than waiting indefinitely during this period of transition."

The news came as the Internet commerce giant posted a net profit of 1.71 billion yuan ($271.48 million) in 2011, up 16.6 per cent over the previous year, but with weakness in the fourth quarter.

The firm said its fourth-quarter net profit fell 6.0 per cent from a year earlier, citing cautiousness due to a weak global economic environment.

"The global economy was sluggish in 2011 due to lacklustre economic conditions in the major developed markets," Alibaba said in a statement.

"Cautious sentiment is restraining consumption in developed economies, which is negatively impacting emerging economies and developing nations. China is unlikely to prove immune to the global slowdown."

Hangzhou-based Alibaba is reportedly planning to borrow $3 billion to buy back the stake Yahoo! owns in the company, as the struggling US Internet firm overhauls its Asia holdings.

Ma, the group chairman, has a longstanding offer to buy all or part of Yahoo!

Shares in Alibaba were suspended at the board's request on February 9 due to media speculation about its Yahoo! buy-back plans. Its share price had dropped 44 per cent in the 12 months leading up to the suspension.

The group said its 2011 earnings before interest, tax and amortisation climbed 21.9 per cent to 1.94 billion yuan.

This was based on more than 76 million registered users, an increase of 23.5 per cent over the previous year.

Despite the gloomy global outlook, demand from small businesses for online sales and marketing services was on the rise.

"Small businesses usually prefer variable, performance-based services as they aim to maximise their return on investment for the marketing dollars they spent," it said.

"This trend supports our view that e-commerce is becoming indispensable for small businesses."

Alibaba's China marketplace saw "steady growth" during the year, with a 16.1 per cent rise in registered users as of December 31 to 50.8 million, spread across 7.8 million storefronts.

International user numbers shot up 41.6 per cent to 25.5 million, mainly in the United States and Europe.

"The increased user base contributed to increasing user traffic and buyer activities. In December, our overseas daily average traffic in terms of unique visitor saw a year-on-year growth of 58 per cent," the company said.

Alibaba operates Taobao, the biggest online shopping site in China.