...Paper Dragon style.
When you "own" a security, on any segment of the capital stack of a company, what precisely do you "own" if actions like these can take place without explicit shareholder approval? The proffered explanation of "we had to divest 40%+ of the company due to regulatory reasons" is amusing and its outlandishness is only in proportion to its real purpose: to ridicule and humuliate its American partners.
So again, what do you have if you invest in these companies?
(snippet from New York Times)
The latest and most significant dust-up became public this week when Yahoo said that the Alibaba Group had transferred ownership of Alipay, an online payment service, to a group led by Jack Ma, Alibaba’s chief executive. The move was particularly worrisome to Yahoo because it would seem to erode the value of its 43 percent stake in Alibaba, which also operates separate eBay-style sites for businesses and consumers.
Yahoo recently said that stake’s value had more than doubled to $2.3 billion, making it one of its most valuable assets.
The intrigue grew on Thursday when Yahoo said in another regulatory filing that it had learned of the transfer only after it was completed on March 31. Furthermore, Yahoo said that Alibaba’s management had transferred Alipay without getting approval from Alibaba’s board.
Not surprisingly, Yahoo said that it and another investor, SoftBank, “are engaged in ongoing discussions” with Alibaba. Granted, those discussions, Wall Street analysts pointed out, are taking place after the fact, not before, as would normally be the case for such major financial decisions.
Alibaba’s explanation was that it had to transfer ownership to get Alipay for a regulatory license that requires domestic ownership of certain nonfinancial institutions.