Alibaba Snaps Up China’s YouTube In $4.2 Billion Deal

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Alibaba Snaps Up China’s YouTube In $4.2 Billion Deal
By Charliepug (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Video streaming is clearly becoming the preferred way for consumers across the globe to access their entertainment content. That’s why it’s not too surprising to hear that Youku Tudou, often called China’s YouTube, has been acquired by internet giant Alibaba. The news was announced in a statement released Friday, October 16th.

Of note, Alibaba, China’s largest e-commerce player, already had an 18% stake in the the popular video-streaming firm. The statement points out that the price of $26.60 per share represents a 30% premium to Thursday’s closing price of Youku Tudou.

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That works out to a value of close to $4.2 billion for the company based on the current number of outstanding shares.

Youku Tudou is China’s most popular video-streaming service, and the acquisition will allow Alibaba to stream U.S. films and dramas to around 35% of the population of China.

More on Alibaba’s acquisition of Youku Tudou

The statement from the Chinese internet giant on Friday noted it had offered $26.60 per Youku Tudou American depositary receipt (ADR) for the approximately 82% of the company’s shares that it does not already own.

Analysts point out that Youku Tudou is a logical fit for Alibaba, as Youku has also been focusing on U.S. studios for its programming. Unlike YouTube, the firm mainly streams professionally produced content instead of amateur videos. The company is also planning to collaborate with U.S. 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.

Alibaba’s statement also noted the offer was supported Youku Tudou chief Victor Koo, who had agreed to stay on as chairman and chief executive of the firm. Alibaba is, however, expected to take the firm private in the near future.

Statement from Alibaba CEO

“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 CEO Daniel Zhang commented in Friday’s statement.

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