Alibaba took a 18.3 percent stake in the video company back in April 2014, so today’s move sees the ecommerce titan snapping up all the remaining shares that it does not own. The deal gives Youku Tudou a valuation of approximately $5.2 billion.
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“Digital products, especially video, are just as important as physical goods in e-commerce”, Alibaba chief executive Daniel Zhang said in the statement.
Youku Tudou’s chairman, who owns eighteen percent of the company, said he supports the offer.
Video streaming is clearly becoming the preferred way for consumers across the globe to access their entertainment content. That’s why it’s not too surprising to hear that Youku Tudou, often called China’s YouTube, has been acquired by internet giant Alibaba.
“I’ve always admired what Victor has built”, Jack Massachusetts, Alibaba’s executive chairman and founder, said in a statement.
Alibaba’s Taobao platform holds more than 90 percent of the consumer-to-consumer market in China, while its Tmall platform is believed to command more than half the Chinese market for business-to-consumer transactions.
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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After acquiring Youku Tudou, Alibaba will still face fierce competition in China’s online video industry, including Baidu’s iQiyi and Tencent’s QQ video services, as well as LeTV and Sohu. Mr. Guo is of the view that Youku’s acquisition could enable Alibaba to strengthen its already robust eco-system, highlighting that Youku now caters to around 600 million monthly users. Its most recent earnings report showed that quarterly revenues grew 28 percent year over year, to $3.4 billion, a number that seemed to dissatisfy Wall Street; Alibaba’s stock price has slid almost 19 percent over the past year. Finally, SunTrust reissued a buy rating and set a $110.00 target price on shares of Alibaba Group Holding in a research note on Thursday, June 25th. The Company and Tudou Holdings Limited announced the completion of the merger (the Merger) between Tudou and Two Merger Sub Inc., a wholly owned subsidiary of Youku, pursuant to the agreement and plan of merger, dated March 11, 2012, by and among Youku, Tudou and Merger Sub. With a return potential of 34%, the stock’s consensus target price stands at $98.35. Alibaba advanced 4.7 per cent to US$71.78. The 52-week high of the share price is $31.5 and the company has a market cap of $3,256 million.
