Alibaba makes offer for China's YouTube, Youku Tudou

GMT 12:52 2015 Friday ,16 October

Arab Today, arab today Alibaba makes offer for China's YouTube, Youku Tudou

Alibaba already owns 18.3 percent of Youku Tudou
Shanghai - AFP

Chinese e-commerce giant Alibaba on Friday made a multi-billion-dollar offer to buy the outstanding shares of online video company Youku Tudou -- the country's equivalent of YouTube -- the firms said, in its latest push into entertainment.

Alibaba, often described as China's eBay or Amazon, is king of e-commerce in the Asian country, but is making a string of acquisitions as it seeks to develop beyond its traditional transaction platforms into a broader Internet company.

Analysts said the deal could help Alibaba draw more traffic to its sites and offer a vehicle to integrate its media and entertainment assets.

The firm, which already owns 18.3 percent of the New York-listed target company, is offering $26.60 in cash per American depositary share (ADS), a Youku Tudou statement said, without giving a total value for the deal.

Each ADS represents 18 ordinary shares in Youku Tudou.

Alibaba had offered $3.6 billion for the remaining stake in Youku Tudou, Bloomberg News reported, quoting a person familiar with the matter. The deal valued the entire Internet television company at more than $4.0 billion, it said.

The offer represents a 30.2 percent premium over the stock's closing price on Thursday, said Youku Tudou, which described the "going private" proposal as preliminary.

But the statement added that Youku Tudou's chairman and chief executive officer Victor Koo and other major shareholders supported the deal, making it likely to go through.

"Alibaba needs more media resources to induce more traffic in the next quarter and it also needs a strong leader to integrate the media assets under its name," Guotai Junan Securities analyst Ray Zhao told AFP.

"But Alibaba still needs to integrate all the resources it has now to make it work," he said.

The stock price of the firm, also listed on the New York Stock Exchange, has fallen around 40 percent from its peak in November, as a proxy for China's slowing economy.

Founder Jack Ma has sought to reassure investors.

"I do not agree with the notion that consumption will decline as economic growth slows," he said in a letter to shareholders earlier this month.

"It is inaccurate to think that the slowdown of the Chinese economy means that Chinese people are unwilling to spend."

In a statement announcing the offer for Youku Tudou, Ma said his company aimed to develop the firm as China's leading digital entertainment platform.

Most of Youku Tudou's online video offerings are professionally produced content licensed from copyright holders.

"Youku Tudou’s high-quality video content will become a core component of the digital products of Alibaba's e-commerce (business)," Alibaba chief executive officer Daniel Zhang said.

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.

But Alibaba has also invested in its first Hollywood film, "Mission: Impossible - Rogue Nation", acting as promotional partner in China with Paramount Pictures for the movie.

Last month, Alibaba also set up a new company to focus on professional sports, including media, events and ticketing.

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