Alibaba Completes Acquisition Of Youku Tudou

Alibaba has paid $4 billion for the outstanding shares in order to complete the acquisition of the Chinese video giant, Youku Tudou

Alibaba Group Holding is constantly looking for opportunities to expand and improve its media division by making deals and acquisitions. The company was said to acquire the YouTube of China in order to not only bolster the media presence but also generate more traffic to its e-commerce marketplaces. This is not only being done from the video sector but the company expects its financial subsidiary and its movie and film subsidiary to bring more traffic to its online platforms one way or another.

Youku Tudou is known as the YouTube of China which is leading the online video site which has the majority market share of China. Alibaba Group already had a stake in the video platform and it was expected to either buy more stakes or go for a takeover in the coming times. The Chinese e-commerce giant recently revealed that it has completed the takeover of ‘Youku Tudou’. 

Youku Tudou is the result of a merger of the two Chinese firms happened back in 2012 which initially formed the online video platform. Ever since then, it is the number one destination for all Chinese users to stream content.

The negotiations as well as the deal were private which it revealed in November last year. The shareholders of Youku approved the sale of the video streaming giant in March. Youku Tudou was valued at $5.40 billion in the market and Alibaba had to pay $27.6 per New York Stock Exchange (NYSE) listed ads. Alibaba and its owner ‘Jack Ma’ previously owned close to a fifth of company through the funding of Yunfeng fund. Hence the online retailer paid for the outstanding shares only which accounted to $4 billion via YK subsidiary.

The online video streaming platform defines itself as a “leading multi-screen entertainment and media company in China” and as “China’s leading Internet television platform.”

The streaming businesses in China are constantly striving to build and gain market share by improving technology one way or another. Their main aim is to capitalize the mobile market but the revenue growth has ‘outstripped’ profitability. Variety reported, “For the 2014 calendar year Youku Tudou reported losses of $135 million (RMB837 million), up from a loss of $92 million (RMB600 million) in 2014.”

Youku does face competition from a domestic rival named iQIYI, which is experiencing loss in the market. Due to not keeping up with the market pace, the company might be subject for a buyout proposal in the coming times, which would see the founder Gong Yu and Robin Li (founder of Baidu) to pay $2.8 billion in order to remove it from the parent company. iQIYI’s parent company is Baidu.

Alibaba Group is increasing its status in the media division and its product portfolio is expanding day by day. The company’s interests include Alibaba Pictures Group, which is a producer and investor in films domain, stake in Wasu Media, and Hong Kong’s leading newspaper South China Morning Post.