Alibaba to buy rest of Youku Tudou (China's YouTube) for $3.5 bn

E-commerce giant Alibaba Group Holding Ltd offered to buy the rest of Chinese video streaming site Youku Tudou Inc, known as China's YouTube for $3.5- billion in cash in order to get access to more than half a billion online video users.

Alibaba had acquired an 18.3-per cent stake in Youku Tudou in 2014 for $1.2 billion, as part of its plan to diversify beyond its core business of online shopping.

Alibaba has offered to pay $26.60 per share for the remaining 82-per cent of the company it does not own, a 30-per cent premium to Youku Tudou's yesterday closing price, valuing the New York Stock Exchange-listed company at about $5.2 billion.

Youku Tudou's chairman and CEO, Victor Koo, who holds around 18 per cent stake has agreed to the deal.

Daniel Zhang, Alibaba's chief executive, said, ''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.''

Formed in 2012 through the merger of then-rivals Youku and Tudou, Youku Tudou is one of China's biggest video sites with 580 million monthly users.

Youku has never made a profit since inception and reported a 57-per cent rise in revenue in the second quarter of this year, and a net loss of $55.2 million.

The deal would give Alibaba, which has recently expanded into films, a larger arena to broadcast content including local movies, Hollywood blockbusters to China's middle-class consumers.