 "Alibaba buys Youku in deal said to be valued at $4.8 bn")
Alibaba Group Holding agreed to buy video service Youku Tudou in a deal said to be valued at $4.8 billion in total, as billionaire Jack Ma seeks to stream more content to Chinese Internet users through control of the YouTube-like site.
Net of Youku's cash, the price is about $3.7 billion, said a person familiar with the transaction who asked not to be identified because the details aren't public.
Alibaba, China's biggest online shopping company, raised its offer to $27.60 in cash from $26.60 last month. The new price is 35 per cent above Youku's stock price the day before the initial bid was disclosed. Youku's board has approved the merger agreement, Alibaba, which already owned a minority stake in the company, said in a statement.
Full ownership of Youku will help Ma deliver US films and drama series to more than a third of China's population as Alibaba competes with Baidu and Tencent Holdings for the attention of Internet users. The deal comes after he toured Hollywood to meet with studio executives, took control of a Chinese movie studio and invested in the latest Mission: Impossible film.
"The move into digital media makes a lot of sense," said Rob Sanderson, an analyst at MKM Partners in Stamford, Connecticut, who recommends buying Alibaba's shares. "The rise of Internet video is really undeniable around the world, so I think it's a strategy that could produce quite a bit of leverage given the size of their communities."
Youku and Tencent's video sites both had about 286 million unique visitors in August, yet viewers spent more time watching content on Youku, according to data compiled by Bloomberg. Baidu's IQiyi had 273 million visitors.
More than 461 million people in China consumed video online as of June, with 354 million users accessing from mobile phones, according to the China Internet Network Information Center. Alibaba's shares fell 2.1 per cent to $83.61 at the close in New York, reversing earlier gains after CNBC reported that Kynikos Associates founder Jim Chanos said investors should be bearish on the stock and recommended it as a short-sale trade. Youku jumped 7.3 per cent to $26.14.
