Alibaba Group Holding Ltd. offered to buy the rest of Youku Tudou Inc. for $26.60 a share in cash.
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Now it’s offering $26.60 per share, or $3.6 billion, for the remaining 82%.
Alibaba’s shares rose 4.73 percent to close at 71.78 US dollars in New York on Thursday.
Alibaba said they have sought the support of the founding shareholders of Youku, including Victor Koo, Chegwei Capital and their affiliates.
The e-commerce giant now owns 18.3% of Youku Tudou, which is quoted on the New York Stock Exchange and is widely regarded as a Chinese version of YouTube.
Alibaba Group (NYSE:BABA) today announced that it made a non-binding proposal to the board of directors of Youku Tudou Inc. We note that Alibaba has a right of first offer with respect to a change of control transaction involving the Company, including any merger or sale of the Company. Stiff competition from similar Chinese video streamers like LeTV and Baidu’s iQiyi has led Youku and rivals to spend hundreds of millions of dollars acquiring licenses for famous movies and TV shows, in hopes of differentiating themselves and attracting more eyeballs.
With the acquistion, Alibaba plans to use its data-driven platforms in e-commerce, media and advertising in concert with Youku’s large user base, particularly in mobile, to power its digital entertainment strategy.
The deal gives Alibaba access to a sophisticated, user-friendly operation. We believe synergies are likely to be very limited between Alibaba and Youku, but we do view Youku as one of the stronger digital media assets in China.
Reuters noted that if Alibaba pushes through with this multi-billion deal, it will be purchasing all of the shares of Youku.
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Youku Tudou Inc. (Youku), formerly Youku Inc., is an Internet television company in the Peoples Republic of China. In the past two years Alibaba has invested in everything from China’s answer to Bloomberg to one of Asia’s most popular browser apps to various entertainment companies. The share price was up by more than 4% in pre-market trading to $20.41 a share. This committee will use the services of independent and legal financial advisors to help it reach a final decision. Alibaba launched its own streaming video platform, Tmall Box Office, or TBO, back in September.
