Alibaba Offers $3.6 Billion To Buy Chinese Video Streaming Site

Alibaba announce on Friday it’s intention to buy up the rest of Chinese video streaming site Youku Tudou for $3.6 billion deal signaling the e-commerce giant’s intent to expand beyond its core business of online shopping.

What does Youku do you ask?  It’s a YouTube imitation site that runs videos, clips, etc just like YouTube does. Of course, the Chinese government has no issues with its citizens accessing Youku content.

The deal would give the company, which has been expanding into films, a bigger platform to broadcast content including Hollywood blockbusters directly to China’s growing ranks of middle-class consumers.



“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 Group Holdings Ltd. CEO Daniel Zhang said.

The company, which already owns 18.3 percent of Youku Tudou’s U.S.-listed shares, said it’s proposing to buy the remaining stock for $26.60 in cash per share, or 30.2 percent more than the last closing price on the New York Stock Exchange.

After subtracting Youku’s approximately $1 billion in cash on hand, Alibaba is paying about $3.6 billion to buy the stake.

Youku Tudou said its chairman and chief executive, Victor Koo, supports Alibaba’s offer.

The offer follows a series of moves by Alibaba Group Holdings Ltd. to expand into the film industry through its film arm, Alibaba Pictures Group. Recent investments include a deal to collaborate with Paramount Pictures to promote Mission: Impossible – Rogue Nation, the latest in the spy thriller series starring Tom Cruise, and an investment in a movie starring South Korean star Kim Soo-hyun.

Alibaba made its initial investment in Youku Tudou, which is seen as China’s version of Youtube, in 2014. By contrast, Google paid $1.6 billion for YouTube in 2006.

The deal gives Alibaba access to a sophisticated, user-friendly operation. Youku’s two private streaming sites, which attract a young audience, have operated with fewer of the restrictions dogging state-run TV broadcasters, allowing it to introduce more varied and foreign content.

Youku has never turned a profit by standard accounting measures. Its loss for the most recent quarter widened to 342 million yuan ($55.2 million) from 142.3 million yuan in the same period in 2014, according to its latest earnings report.