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Alibaba acquires Chinese video streaming site Youku Tudou

Fri 6 Nov 2015

Chinese e-retail giant Alibaba Group has finalised its purchase [paywalled] of video streaming service Youku Tudou, as mogul Jack Ma seeks to extend the firm’s online influence by delivering YouTube-esque content to internet users in China.

A statement released today confirmed the merger agreement. In October, Alibaba had offered $26.60 a share in cash, for a total deal value of around $4.6bn (approx. £3bn) – the bid was later raised to $27.60 per share. The deal was unanimously approved by the Youku Tudou board.

Victor Koo, Youku’s chairman and CEO had promised his shares in support of the agreement and stated that he would continue to lead the company should the deal close. It has been confirmed that he will remain at the head of the operation. Koo announced that he was keen to help Alibaba boost its multiscreen entertainment and media business.

“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,” he added.

Through the new offering, Alibaba will be able to deliver U.S. movies and series to the fast-growing Chinese online video market. As of June this year, over 461 million people in China had watched video content online, with 354 million of these accessing the media from mobile devices.

Having bought out Chinese film studio ChinaVision Media in late 2014 to create Alibaba Pictures, the group now hopes to establish several collaborations with top U.S. entertainment producers. Recently the organisation has been in discussion with Hollywood actors, agents and studio executives, including Sony Pictures’ CEO Michael Lynton. A trip to La La Land last year, inspired an investment in Paramount Pictures blockbuster Mission Impossible – Rogue Nation, with Alibaba gaining rights to sell merchandise and tickets to its Chinese customers.

The e-commerce specialist also launched a Netflix-style streaming service earlier this year, Tmall Box Office (TBO), which could now be integrated with the Youku Tudou platform. Although Netflix has reportedly considered a move into the Chinese market, it may face added difficulties from this new domestic competition and China’s strict regulation over foreign content.

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