Boston, MA 08/19/2014 (wallstreetpr) – Alibaba Group Holding’s initial public offering scheduled to be offered on August 8th was delayed owing to accounting flaws found in its recently acquired film division. David Ingles talked about this issue and the possibility of drawing a closer look from the Securities and Exchange Commission (SEC) on Bloomberg’s First Up.
As the initial date of the IPO has come and gone without any news, Bloomberg’s David Ingles said that according to sources, Alibaba’s IPO would be on September 16th. This delay was caused due to certain hurdles they faced in the process, especially the one related to accounting errors which surfaced last Friday. This discovery led to the subsequent delay in the reporting of their midyear results.
“They were supposed to release [the results] on the 29th this month and the reason [for the delay] being they found possible accounting issues, non-compliant treatments or flaws,” he said.
Alibaba Group Holdings previously acquired a 60 % stake in ChinaVision media, currently known as Alibaba Pictures, and was all set for an US IPO when irregularities and non-compliance treatments for prior accounting periods were noticed. The SEC has clearly stated that it does not want to obstruct the IPO proceedings but will work to ensure that Alibaba Group Holdings is disclosing irregularities properly. Ingles explained that, “What [the SEC] do is that they want to make sure you are properly disclosing before you go on your road show just so people know what they are buying into.”
What would this delay mean for the two major stake holders in Alibaba Group Holding, namely, Yahoo! Inc. (NASDAQ:YHOO), with a 23 % interest and Softbank Corp (TYO:9984), with a 34 % interest? They have to keep their fingers crossed hoping that this delay will bring more enthusiasm into the IPO offering which is supposedly the largest ever in the United States. According to Yahoo’s amended share repurchase agreement with Alibaba, the former’s stake is expected to fall to 16 % after the IPO.
