Alibaba.com (Hong Kong stock code 01688)  resumed trading in shares this morning and is up 42.055 at HK$13.14. 

The company said parent Alibaba Group proposes a privatization of Alibaba.com at an offer price of HK$13.5 in cash apiece, representing a premium of about 45.9% over the closing price of HK$9.25 The cancellation price represents a price to earnings ratio of 33.2 times the diluted earnings per Share of Alibaba.com for the year ended 31 December 2011. The amount of cash required to implement the proposal would be about HK$18.25 billion. On the assumption that all outstanding share options and offeror share options are exercised, the amount of cash required for the proposal would be around HK$19.63 billion. Alibaba Group holds around 73.45% interest in Alibaba.com. Following implementation of the proposal, the offeror and Alibaba.com will be able to make strategic decisions focused on long-term benefits, free from the pressure of market expectations, earnings visibility and share price fluctuations associated with being a publicly listed company.

Nomura upgraded Alibaba.com to “neutral” from “reduce” on the official announcement of the privatization proposal, and raised its target price to HK$13.5 from HK$8, equal to the proposed price. It noted that Alibaba’s 4Q 2011 earnings were below estimates. The number of CGS (China Gold Supplier) members decreased q-q as expected. This is the fourth time in a row the company registered a negative net adds since 2007. Nomura sees futher downside in net adds and expects more quarters of a shrinking customer base coupled with shrinking margins. The research house believes that the proposal is highly likely to be approved by shareholders.