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Yahoo mulling sale of Alibaba stake

Yahoo is understood to be considering a plan to cut its 40% stake in Chinese e-commerce company Alibaba Group and sell its 35% ownership position in Yahoo Japan.

The deal would allow Yahoo to focus on turning around its core Internet advertising business under a new leader. According to some estimates, the deal will value Yahoo's Asian assets at $17bn.

The move comes months after Yahoo ousted its chief executive Carol Bartz, and embarked upon a strategic review of its operations.

Yahoo bought its stake in Alibaba for $1bn in 2005. Alibaba is China's biggest e-commerce group and Yahoo's stake in it is considered by many as one of its most prized assets.

There have been strong rumours that the firm could sell off part or all of itself to private equity investors. Both China's Alibaba and Japan's Softbank, owner of the rest of Yahoo Japan, have also been reported as interested in buying up some or all of Yahoo.

Alibaba chief Jack Ma has made no secret of the fact that a lot of his interest in buying Yahoo stems from his desire to claw back the bit of Alibaba the American company owns.

However, relations between the two companies have deteriorated reaching a tipping point earlier this year after Alibaba spun off its online payment business, Alipay.

Yahoo accused the Chinese company of hiding the move from it, saying the change had been made in August 2010, but it only found out about it in March this year.