Baidu Inc, the leading Chinese language internet search provider, is looking to diversify from its core search business and augment its mobile presence. The company has signed a Memorandum of Understanding on the proposed acquisition of all equity interests in 91 Wireless from NetDragon.
91 Wireless, known for the 91 Smartphone Apps Marketplaces, amongst other things is one of the key businesses of NetDragon. The announcement has already impacted NetDragon’s shares, showing a downslide by nearly 20 per cent.
For Baidu however, the purchase may just give it the fillip that it needs to leverage the growth mobile that the China market is seeing. As is known, Qihoo 360, another local search engine in China has steadily grown since its launch in 2012 and has an app store too.
The development adds to the purchase spree that China is witnessing. Baidu itself had said earlier in the year that it would buy the online video business of PPS Net TV for USD 370 million. Companies such as Alibaba Group took some big steps too and bought stake in Sina Corp’s social-networking website Weibo and navigation and maps tool AutoNavi.
According to the MOU, Baidu will purchase the entire issued share capital of 91 Wireless for a total of USD 1.9 billion. Baidu and NetDragon will further negotiate and agree on the relevant terms of the Proposed Acquisition in the definitive agreements by August 14 2013 to purchase NetDragon’s 57.41 per cent equity interest in 91 Wireless. Before the signing of definitive agreements, NetDragon is restricted from approaching or discussing with any third parties the sale of 91 Wireless. Baidu intends to purchase the remaining equity interests in 91 Wireless from other shareholders based on terms and conditions similar to those offered to NetDragon, provided those shareholders are willing to sell by the Long Stop Date.
Started in 2007, 91 Wireless mainly engages in the development and operation of two leading smartphone app distribution platforms in China, namely 91 Assistant and HiMarket (91 Smartphone Apps Marketplaces), community websites, 91 Launcher, 91 Panda Reader, as well as other products for smartphone users. To date, over 10 billion apps have been downloaded through the 91 Smartphone Apps Marketplaces. According to the iResearch 2011-2012 report, compiled by independent research firm iResearch, 91 Wireless is the leading third party app distribution platform in China by both active users and accumulated downloads.