In a bid to expand its base in video services, Alibaba Group plans to buy out China’s YouTube like service, Youku Tudou. Previously, Alibaba held 18.3 per cent in the video firm. Now, the ecommerce giant has submitted a proposal to acquire the video-streaming firm in USD 3.5 billion in an all cash deal.
According to a company statement, the proposal is subject to satisfactory completion of due diligence by Alibaba and the negotiation of a mutually acceptable definitive merger agreement.
Alibaba is focussing on digital entertainment to promote consumption of virtual goods and services. Under Alibaba’s proposal, Youku’s founder, Victor Koo, would continue to lead the business as chairman and chief executive officer.
“We are pleased to submit the proposal to the Youku board of directors. We believe that the proposed transaction, with tighter integration of our resources, will help Youku achieve exciting growth in the years ahead by leveraging Alibaba’s assets in living-room entertainment, e-commerce, advertising and data analytics. 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. I look forward to working with Victor and his leadership team to grow our combined digital entertainment business,” said Daniel Zhang, chief executive officer of Alibaba Group.
“I’ve always admired what Victor has built. A closer partnership with Youku will give us the opportunity to support Victor and his leadership team to fulfill the dream of building the leading digital entertainment platform in China,” said Alibaba Group executive chairman Jack Ma.
Alibaba is making the proposal with the support of the founding shareholders of Youku, including Mr Koo, Chengwei Capital and their affiliates.