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November 26, 2009

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Shanda said to buy video site

NASDAQ-LISTED Shanda Entertainment is said to have acquired Beijing-based online video site through shares of a Shanda subsidiary in a deal estimated at US$44 million, industry sources said yesterday.

It was the first merger and acquisition transaction in the Chinese online video industry, which has struggled for years for profitability, industry insiders said.

Shanda will acquire through a share swap via its listed subsidiary Hurray! Holdings. The deal was signed a week ago, reported yesterday, without providing more details.

Both sides declined to comment yesterday.

"We welcome the deal if it really happened. It represents the value of video Websites and will boost the development of the industry in China," Wang Wei, chief executive of a major domestic Website, said yesterday.

Ku6 has spent several months scouting for buyers because the online video market is now dominated by two or three firms such as and

A separate source, who declined to be identified, said Shanda perhaps intended to announce the Ku6 acquisition on Saturday to mark the company's 10th anniversary.

Shanda, which acquired 51 percent of Hurray for US$46.2 million in June, will expand from online games to multimedia content.

China's major online Websites are set to post their first profitable year in 2010 after spending millions of venture capital funds since 2000.



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