Chinese search engine giant Baidu Inc (ADR) (NASDAQ:BIDU) has acquired controlling stake in Brazilian online discount company Peixe Urbano. Both companies declined to reveal Baidu’s stake in Peixe Urbano or the size of the deal. The world’s No.2 search company entered the Brazilian market in July 2012. Acquisition of Peixe Urbano is the latest step in the company’s strategy to expand its footprint in Latin America’s largest economy.
Brazil one of the priority markets for Baidu
Under the terms of the deal, Peixe Urbano’s management team, led by co-founder Julio Vasconcellos, will operate autonomously. Peixe Urbano was launched in 2010 as Brazilian equivalent of Groupon. It grew exponentially in the first couple of years until a major decline in 2012. Baidu plans to leverage the platform to create healthy relationships with service providers that will help strengthen its search engine in the country.
The Chinese company launched its Portuguese-language search engine in Brazil in July. The company has pledged to invest over $50 million in Brazil over the next three years. Baidu will also open its seventh R&D center in Brazil. The Beijing-based Internet giant aims to connect at least half of the world’s total Internet population to its products by the end of 2019. Brazil is one of Baidu’s priority markets, where it estimates that 43 million people will go online in the next three years.
Baidu has 50 million users in Brazil
According to Reuters, e-commerce in Brazil will grow at 18% annually through 2016. Baidu’s head of global business, Johnson Hu, said that more than 50 million Brazilians already access Baidu’s services every day. Peixe Urbano boasts of more than 30,000 merchant partners and over 20 million customers in Brazil. Since its inception, it has sold more than 30 million discount vouchers.
Baidu is investing heavily to upgrade its services and increase market share in businesses such as e-commerce and mobile social networking. However, Goldman Sachs doesn’t see strong growth prospects for Brazilian online retailers. E-commerce companies in the country are grappling with eroding profitability, fierce competition, and rising interest rates.
Baidu shares inched up 0.16% to $200 in pre-market trading Tuesday.