Alibaba raises offer for rest of Chinese video streaming site Youku Tudou to $3.7 bn

E-commerce giant Alibaba Group Holding Ltd today struck a deal to buy the rest of Chinese video streaming site Youku Tudou Inc, known as China's YouTube for $3.7 billion in cash.

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, and last month offered to pay $26.60 per share or $3.5- billion. (See: Alibaba to buy rest of Youku Tudou (China's YouTube) for $3.5 bn)

The revised total deal values Youku Tudou at about $4.4 billion.

Alibaba will pay $27.60 an American depositary share, a 35.1 per cent premium to Youku Tudou's closing price on 15 October, the day before it announced having received the buyout proposal from Alibaba.

The board of Youku Tudou has unanimously approved the deal and its chairman and CEO, Victor Koo, who holds around 18-per cent stake has also agreed to tender his shares to the offer.

Koo will continue to run the company after the transaction closes.

Koo said, ''We are confident that we will strengthen our market position and further accelerate our growth through the integration of our advertising and consumer businesses with Alibaba's platform and Alipay services.''

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 but 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.

Alibaba has recently invested in digital media in China, including $804 million last year for a controlling stake in ChinaVision Media Group Ltd (now known as Alibaba Pictures), about $1 billion for a 20 per cent stake in Wasu Media Holding Co Ltd and this year invested $383 million in TV program producer Beijing Enlight Media Co Ltd.