Join NexChange - the professional
network for the financial services
industry - and receive a free one-
year subscription to Forbes
Knight in shining armour: Alibaba's $3.5B bid for Youku Tudou
It looks like Alibaba could add another string to its bow with a bid to buy US-listed Youku Tudou. For the ailing Chinese video site the timing could not be better.
Alibaba says it's offering to pay $26.60 per American depositary share to acquire the 82% it doesn't already own. The offer represents about a 30% premium on Youku Tudou's last closing price prior to the bid going public and values the company at $5.1 billion. Tech Crunch reports that total offering is worth $3.5 billion, when taking the cash already on Youku's book already into account.
Its a welcome development for the one-time venture capital-backed Youku which, despite its dominance as China's answer to YouTube, has had a miserable loss-making run on US public markets. Its chairman and CEO Victor Koo has already pledged his shares in support of the deal.
Alibaba already holds an 18% stake having made a strategic investment in May 2014. The decision to gobble up the rest may be fairly opportunistic but it's a large leap for Alibaba as it looks to spread its e-commerce empire to include digital content. Daniel Zhang, chief executive officer of Alibaba Group, said this:
"We believe that the proposed transaction, with tighter integration of our resources, will help Youku achieve exciting growth in the years ahead by leveraging Alibaba's assets in living-room entertainment, e-commerce, advertising and data analytics. Digital products, especially video, are just as important as physical goods in e-commerce."
With Baidu’s iQiyi and Tencent’s QQ video services already operating in this space its is yet another front on which the China's internet giants are battling fiercely for dominance.
Photo: Hans Splinter