Alibaba.com Ltd, China's largest online commerce company, fell the most in three weeks in Hong Kong trading after Microsoft Corp ended its bid to buy Yahoo! Inc, the biggest shareholder in the Chinese company's parent.

The Web company's shares fell 5.9 percent to HK$15.24 (US$1.96) at the end of trading in Hong Kong, their biggest drop since April 10. The city's benchmark Hang Seng Index shed 0.2 percent.

Microsoft's announcement on Saturday that it's walking away from its Yahoo bid spurred some investors to sell Alibaba shares as it's now unlikely the Chinese firm will benefit from working with the world's biggest software maker, said Ivan Li, an analyst at Kim Eng Securities in Hong Kong. Yahoo! owns 39 percent of the Hangzhou-based parent, Alibaba.com Corp.

"Any synergies Alibaba could have gotten from working with Microsoft, if Microsoft bought Yahoo, are now off the table and so sentiment will be quite bad today (Monday)," said Li, who rates Alibaba shares "sell." "There aren't any other potential positives to look forward to for Alibaba right now."

Microsoft said it abandoned its bid for Yahoo after failing to agree on a price. The Washington-based software maker, which in February offered to buy Yahoo stock at US$31 each, said it raised its bid to US$33 a share, while Yahoo demanded US$37, Bloomberg News said.

"Microsoft's bid to buy Yahoo had been positive for Internet companies in general, so the withdrawal of the offer may be negative in the short term," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "The impact on Alibaba may be more pronounced because of Yahoo's holdings."

Shares surge

Alibaba Chairman Jack Ma and Chief Executive David Wei declined to comment on the Microsoft-Yahoo deal yesterday in Hong Kong.

Alibaba.com shares surged 14 percent on February 4 after Microsoft first made its bid for Yahoo. They rose 14 percent on March 19 after the Wall Street Journal said parent Alibaba.com Corp was in talks to buy back Yahoo's stake to ensure its management independence in case Microsoft succeeded.

"The talk of Alibaba buying back its shares from Yahoo was a boost, but with Microsoft walking away, that now also seems unlikely," said Kim Eng's Li.

(Shanghai Daily May 6, 2008)