Alibaba bids to buy Youku Tudou

Alibaba, 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. Last year, Alibaba invested $1.22 billion in the company, which offers a YouTube-like service in China.

The $5.2 billion valuation is based on Yukou Tudou’s 194.47 million shares outstanding as of June 30.

Alibaba said it is making the proposal with the support of the founding shareholders of Youku, including Victor Koo, Chengwei Capital and their affiliates.

On account of a past speculation, Alibaba as of now possesses 18.3 percent of Youku, however now it plans to take full responsibility for organization – which was made when rivals Youku and Tudou converged in 2012 – keeping in mind the end goal to supercharge its attention on computerized amusement. Institutional Investors own 43.73% of Youku.Com- Adr shares. The company is also planning to collaborate with US entertainment producers to create exclusive content for streaming on its website, Chairman Victor Koo noted in an interview in Hong Kong a few months ago.

Taking after the obtaining, Alibaba expects to take Youku private, as per a recording. Strategically, we view this as part of a broader effort by Alibaba to diversify its revenue streams and broaden its exposure to secular Internet trends in China.

Youku isn’t alone in battling it out for the attention of Chinese Internet users, either.

Reuters noted that if Alibaba pushes through with this multi-billion deal, it will be purchasing all of the shares of Youku. Recent research suggested that there’s little to separate Youku and iQiyi (Tudou remains a separate site) as the largest video platforms in China.

“Digital products, especially video, are just as important as physical goods in e-commerce, and Youku’s high-quality video content will be a core component of Alibaba’s digital product offering in the future”, Alibaba Group Holdings Ltd. CEO Daniel Zhang said.

Definitive Agreements. We have engaged Simpson Thacher & Bartlett as our worldwide legal counsel and Morgan Stanley Asia Limited as our financial advisor and are prepared to promptly negotiate and finalize mutually satisfactory definitive agreements with respect to the Acquisition (the “Definitive Agreements”).

More tangible evidence of Alibaba’s media ambition can be found in Tmall Box Office, a Netflix-like service that it recently launched in China, and its move into the living room with smart TVs and set-top boxes. Alibaba’s offer of $26.60 a share is 5 percent higher than Youku’s Friday morning opening stock price of $25.10.