Youku to Buy Out Chief Competitor through Stock Transactions
The Chinese online video behemoth, Youku has reached an agreement that will allow them to acquire their chief competitor, Tudou Holdings in a stock to stock transaction. This move will solidify the two companies’ dominance in the online video sector.
In the agreement, Youku shareholders and ADS holders now own approximately 71.5 percent of the combined entity Youku Tudou Inc. Tudou and ADS shareholders will own 28.5 percent.
Both companies will then control more than a third of China’s online video advertising market. As of the fourth quarter, Youku accounted for 21.8 percent, while Tudou has 13.7 percent. This is according to a Beijing based research firm Analysys International. Both companies went public in the US and are racing to gain users and to acquire licenses for television series and movies. Although struggling to prove to their investors that the can turn an online video delivery into a profitable business.
Tudou’s shares will now be cancelled on the New York Stock Exchange, while Youku’s ADS shares will be found under a new listing YOKU.