Alibaba to buy Youkou Tudou for US$3.7b
Print Edition
ALIBABA Group agreed to buy Youku Tudou Inc — popularly known as China’s YouTube — for about US$3.7 billion, slightly more than what it had offered in October.
The deal announced yesterday will give the e-commerce giant access to more than half a billion online video users, accelerating its push into the Chinese digital media market.
It is also a vote of confidence in China’s economy by Alibaba Chairman Jack Ma, who has said investors should not overreact to his country’s slowing growth.
Alibaba held 18.3 percent of Youku Tudou as of October 16, when it made its initial offer of US$26.60 per American Depository Share. The new offer values the rest of Youku Tudou at about US$4.8 billion.
The new offer represents a premium of 35.1 percent over Youku Tudou’s closing price on October 15.
Any deal would include the US$1.1 billion of cash held by Youku Tudou, Alibaba’s Chief Financial Officer Maggie Wu said in October.
Based on this, Alibaba will end up paying about US$3.7 billion under its revised offer.
Unprofitable Youku Tudou needed the partnership with Alibaba, Summit Research analyst Henry Guo said.
Youku Tudou Chief Executive Victor Koo, a Bain & Co alumnus who owns about 18 percent of Youku Tudou, will remain CEO of Youku Tudou after the deal closes in the first quarter of 2016.
“With Alibaba’s support, Youku Tudou’s future as the leading multi-screen entertainment and media platform in China has been firmly secured,” Koo said in a statement.
Formerly bitter rivals, Youku — which means “what’s best and what’s cool” in Chinese — merged with Tudou — “potato” — in a deal worth over US$1 billion in 2012.
Alibaba has made a number of sizeable investments in digital media in China in the past couple of years.
In March 2014, it agreed to buy a controlling stake in China Vision Media Group Ltd for US$804 million to get access to TV and movie content. The company is now known as Alibaba Pictures.
A month later, Alibaba said it would pay about US$1 billion for a 20 percent stake in Wasu Media Holding Co.
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