Alibaba Group said on Thursday it has reorganized Taobao, China's largest e-commerce website, into three separate companies to better capture opportunities in the industry.

Taobao, which had 70 percent of all online sales transacted in China in the first quarter of the year, will be split effective from Thursday, into three firms, namely its product search engine, eTao, its business to consumer website, Taobao Mall, and its consumer to consumer website Taobao.com.

We believe that reorganizing Taobao into smaller companies will create more value for the whole industry, and therefore, more value to our company and shareholders, Jack Ma said in a letter to employees.

Ma also said he did not rule out taking Alibaba Group public in the future to reward employees and shareholders. Alibaba Group is 40 percent owned by Yahoo Inc with whom they have an estranged relationship.

Jonathan Lu will step down as Taobao's chief executive to focus on his role as Alibaba.com's head. Each of the three Taobao entities will have their own presidents.

Earlier this year, Lu was appointed CEO of Alibaba.

The announcement came during the midday break in Hong Kong. Before the break, Alibaba.com's shares were up by as much as 4.0 percent at an intraday high of HK$11.88, outperforming the main Hang Seng Index's 1.45 percent decline.

For a copy of the statement, please click http://www.hkexnews.hk/listedco/listconews/sehk/20110616/LTN20110616177.pd

For a copy of the statement, please click http://www.hkexnews.hk/listedco/listconews/sehk/20110616/LTN20110616177.pd f

(Reporting by Lee Chyen Yee and Melanie Lee; Editing by Jacqueline Wong)

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