Most parents are happy to see their children grow up bigger and stronger than them. When it comes to a parent company seeing its child company grow up bigger and stronger, it must feel a little embarrassing, as in the case of Yahoo and Alibaba.

After rumours emerged that Alibaba is considering making a bid to buy out Yahoo, its shares jumped as much as 4.8% and 3.3% by the end of the trading day to US$16.23. However it has not publicly announced its whole-company bid intention for Yahoo.

Yahoo currently owns 40% of Alibaba, which it purchased back in 2005 for US$1 billion. Although Yahoo has a big share of Alibaba, Yahoo is only valued at US$20.3 billion compared to US$40.4 billion for Alibaba, or about half. The relationship dynamic looks strange and of course, gives more reason for Alibaba CEO, Jack Ma to buy out Yahoo.

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Jason Lim

Jason is an Australian born Chinese living in Beijing, specializing in entrepreneurship, start-ups and the investment eco-system in China, especially in the tech and social area.