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Renren acquires 56.com for synergies
By Ding Yining |
September 28, 2011, Wednesday
|
Print Edition
Print Edition
CHINA'S leading social networking site Renren Inc said it will pay US$80 million in cash to acquire 100 percent of video sharing site 56.com.
"The synergies that will come after our acquisition of 56.com will further boost user engagement and traffic," Joseph Chen, chairman and CEO of Renren said in a statement.
The transaction may be completed in the fourth quarter this year, NASDAQ-listed Renren said yesterday.
Credit Suisse said in a research report yesterday that user-generated contents on 56.com correlate to Renren's core business, and the ''partnership between 56.com and Renren will enhance user experience in sharing and viewing video clips on Renren's website."
The Swiss bank maintained an "outperform" rating on Renren's shares.
Dong Xu, an analyst with Analysys International, said: ''Acquiring 56.com will be a good news for Renren in the short term but how the partnership could bear rich fruit depends on the long-term strategy."
The majority of 56.com's videos are user-generated, unlike market leaders Tudou and Youku which spend huge amount of money for patented movies and TV series.
56.com has less than 3 percent of China's online video market worth 1 billion yuan (US$156 million) in the second quarter, according to Beijing-based research firm Analysys International. Youku has the lion's share of 23.4 percent of the market while Tudou is second with 14 percent.
The co-founder and CEO of 56.com, Zhou Juan, will join Renren's management team as vice president.
Last month, Sina Corp, operator of China's most popular microblogging site, said it gained 9.05 percent stake in China's second largest video site Tudou as it seeks to add services to its microblogging site Weibo.com.
"The synergies that will come after our acquisition of 56.com will further boost user engagement and traffic," Joseph Chen, chairman and CEO of Renren said in a statement.
The transaction may be completed in the fourth quarter this year, NASDAQ-listed Renren said yesterday.
Credit Suisse said in a research report yesterday that user-generated contents on 56.com correlate to Renren's core business, and the ''partnership between 56.com and Renren will enhance user experience in sharing and viewing video clips on Renren's website."
The Swiss bank maintained an "outperform" rating on Renren's shares.
Dong Xu, an analyst with Analysys International, said: ''Acquiring 56.com will be a good news for Renren in the short term but how the partnership could bear rich fruit depends on the long-term strategy."
The majority of 56.com's videos are user-generated, unlike market leaders Tudou and Youku which spend huge amount of money for patented movies and TV series.
56.com has less than 3 percent of China's online video market worth 1 billion yuan (US$156 million) in the second quarter, according to Beijing-based research firm Analysys International. Youku has the lion's share of 23.4 percent of the market while Tudou is second with 14 percent.
The co-founder and CEO of 56.com, Zhou Juan, will join Renren's management team as vice president.
Last month, Sina Corp, operator of China's most popular microblogging site, said it gained 9.05 percent stake in China's second largest video site Tudou as it seeks to add services to its microblogging site Weibo.com.
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