Alibaba, the New York Stock Exchange-listed Chinese e-commerce giant, has offered to pay $3.5 billion to become the sole owner of Youku Tudou Inc, known as China’s YouTube .
“Alibaba needs traffic. Online or mobile video is the number one place for that,” said Tian Hou, an analyst at TH Capital in New York.
Youku’s market cap is $3.8 billion, and Alibaba intends to pay US$26.60 per share — a decent markup on the most recent closing share price of $20.43. Thus, the deal values Youku at around $5.1 billion. Alibaba confirmed on an analyst call that, taking into account the cash on Youku’s books, its total offering is worth around $3.5 billion.
Alibaba first bought into Youku Tudou in mid-2014, acquiring a stake of about 18 percent as part of a push into online video.Alibaba is intending to take full ownership of the company — which was created when rivals Youku and Tudou merged in 2012 — to supercharge its focus on digital entertainment.
The offer makes Youku Tudou the latest in a string of U.S.-listed Chinese companies being taken private by big shareholders.