Home Business Baidu Acquires China Mobile App Store For $1.9 Billion

Baidu Acquires China Mobile App Store For $1.9 Billion

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Baidu.com, Inc. (ADR) (NASDAQ:BIDU), a Chinese search engine, is looking forward to buying the complete share capital of 91 Wireless, subsidiary of NetDragon Websoft for $1.9 billion, says a press release from Baidu. This deal will be the biggest one in China’s Internet Industry, provided the deal happens.Baidu Acquires China Mobile App Store For $1.9 Billion

NetDragon’s investors not happy with the deal

NetDragon, which is in the business of game development and mobile internet business, in Fujian, announced that Baidu.com, Inc. (ADR) (NASDAQ:BIDU) will take over 57.41 percent stake in 91 Wireless.  According to NetDragon, selling a certain stake of 91 Wireless will increase their earnings and also expand the capital base.

NetDragon took a contrary step from its earlier announced plan under which it stated to spin off and list 91 Wireless on Hong Kong’s secondary Growth Enterprise Market. Shares of NetDragon declined 18 per cent to HK$19.88 in morning trading because investors hold 91 Wireless as core business segment of NetDragon, says a report from FinancialTimes.

Baidu to acquire remaining stake on similar terms

91 Wireless has designs, as well as providing two popular app distribution platforms for iOS and Android systems on the websites Sj.91.com and apk.hiapk.com. The company stated that more than 12.9 billion downloads were done from these websites in 2012.

91 Wireless will sell its remaining 42.59 percent stake to Baidu under the same terms offered to NetDragon. 91 wireless and Baidu deal is bigger than $1 billion paid by Yahoo to acquire 40 percent stake in Alibaba, in 2005.

Other stakeholders in 91 Wireless are private equity fund IDG, owning 10.39 per cent of the company; Singapore’s Temasek wuth 5.71 per cent through Vertex; and Richard Li, chairman of PCCW and the younger son of Asia’s richest man, Li Ka-shing, has 4.14 per cent through Pacific Century. Former Chief executive of Alibaba, David Wei also holds a stake in 91 Wireless, as per the reports of media.

Baidu rapidly foraying into Mobile Internet

Baidu.com, Inc. (ADR) (NASDAQ:BIDU) has taken aggressive steps in the mobile internet area by acquiring a stake in 91 Wirelesse because the current trend is witnessing users moving from PC to Smartphones. Baidu purchased PPS Net TV’s Internet Video business by paying $370 million and online video site iQiyi.com last year.

Alibaba, which is the most dominant e-commerce site in China, is also developing its mobile platform rapidly.

In order to conclude the deal Baidu.com, Inc. (ADR) (NASDAQ:BIDU), will have to get an approval from other shareholders at the latest by August 14 or it will be liable to pay a break- up fee of $50 million to NetDragon.

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Aman Jain
Personal Finance Writer

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