Alibaba Group Holding Ltd Buys Majority Stake In AdChina

Alibaba Group Holding Ltd Buys Majority Stake In AdChina
By Charliepug (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Chinese online retail giant Alibaba announced Wednesday that it has acquired a controlling stake in online marketing platform AdChina. Alibaba did not disclose the stake it took or the size of the deal, but said that the investment makes it a majority shareholder in the Shanghai-based digital marketing platform. AdChina was founded in 2007.

AdChina to collaborate with Alibaba’s ad platform

According to Reuters, the Shanghai-based company generated $51 million revenue in 2011. AdChina had filed for a $100 million IPO in February 2012, but pulled the listing in 2013. In 2010, a group of investors including News Corp and Norwest Venture Partners backed AdChina with $40 million investment. It is Alibaba’s first acquisition this year. The e-commerce giant spent a staggering $6.2 billion on acquisitions last year.

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AdChina will work Alibaba’s online and mobile advertising platform Alimama. They will work together to develop a platform to provide marketing services to online media outlets, third-party service providers and businesses. According to iResearch, advertising accounts for more than 50% of Alibaba’s revenue. The Jack Ma-led company is looking for ways to shift its advertising platform from PC websites to mobile apps.

Alibaba’s investment to enhance AdChina’s strengths

Alimama sells search-linked ads to merchants selling their goods on Alibaba’s Taobao and Tmall platforms. Merchants participate in auctions of search keywords, just like businesses spend on Google’s search-linked ads. Alibaba also charges for other ad spaces on the home pages of its online retail platforms. Alibaba said in a statement that its strategic stake would help AdChina enhance its competitive strengths.

AdChina will also collaborate with Alibaba’s cloud computing arm Aliyun. Separately, Alibaba is in advanced talks to invest $550 million in India’s One97 Communications, which operates mobile-focused online marketplace and payment platform Paytm. The Chinese company values One97 at $1.9 billion. The Indian company will issue fresh shares to Alibaba, diluting the holdings of existing shareholders.

Alibaba shares fell 0.84% on Tuesday to close at $100.77.

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