The Chinese e-commerce giant, Alibaba announces to acquire remaining 82% of Youku Tudou, China’s YouTube-like service provider. The deal is expected to total to $3.6 billion with the individual share rate of $26.60. The company already own $18.3% stake in the video company which is bought for $1.2 billion in 2014.
Considering the filing made to the New York Stock Exchange regulator, Youku Tudou will go private and be delisted from the NYSE when the deal is closed. The company becoming private will make no changes in management board and Victor Koo will continue to head the company as its chairperson and CEO.
Alibaba has been very active in the media industry. Its management believes online video will grow to $14 billion by 2018 from $4 billion in 2014. Along with Tencent Video and Baidu’s iQiyi, Youku is a market leader with a huge active users of 500 million. Though the company has never shown reports of big profits, it’s the number of visitors per site that has attracted Alibaba to acquire it. An analyst said that Alibaba has acquired video firm to provide online television and film for Chinese viewers. It has already acquired a big film production company called ChinaVision media in 2014.
Daniel Zhang, Alibaba CEO said, ” Digital products, especially video, are just as important as physical goods in e-commerce, Youku’s high-quality video content will be a core component of Alibaba’s digital product offering in the future.” Now Youku Tudou already provides its subscriber with Western and Chinese movie though the company has not been aggressive to market it.
The acquisition would be the second-largest M&A transaction for the group, overtaken only by its 20% stake in electronics chain Sunning, which was purchased fr $4.46 billion back in August. The bid for YouKu Tudou is Alibaba’s latest venture into the entertainment sector for the company has already signed licensing agreements with major Hollywood Studios and has spent billions of dollars on stakes in Chinese production houses to win access to its own content.