Yahoo Alibaba deal collapses over Taobao

As we predicted, Yahoo's efforts to come to an agreement with Alibaba and pull its own nadgers out of the fire have failed.

But according to Reuters, the reason a complex $17 billion asset swap with its Asian partners went west was because no-one could agree how to value Alibaba's online retail business, to wit, Taobao.

Negotiations between Yahoo, Alibaba and Japan's Softbank agreed on a basic outline for a deal that would have returned Yahoo's stakes in those companies to their owners in return for unspecified assets.

But Yahoo started to have second thoughts about Alibaba's valuation when it noted how well Taobao was doing.

Until now everyone thought that the ending of talks was simply a delaying tactic used by one of the parties involved in the complex transaction.

But now it seems that Yahoo was really concerned that it was not getting a slice of the Taobao pie.

The e-commerce web site is considered one of the most valuable businesses owned by Alibaba and the outfit is not giving any of the unit's financial details away.

What makes it worse is that Taobao performed well which makes it difficult for any negotiators to work out what it is worth.