Alibaba to Purchase Youku Shares in Cash
Alibaba Group Holdings is now taking full control of Youku Tudou inc. one of the leading Internet video company in China a move expert say is pushing further into the digital entertainment industry. Alibaba already owns 18 percent of youku tudou through a strategic investment that they made in May of 2014. Alibaba made a non binding proposal that will acquire all outstanding shares of the media company that doesn’t already own for $26.60 per American depositary share in an all cash transaction that is valued at $4.5 billion.
Digital products like videos are important products for e-commerce, Youku’s high quality video content is a core component of Alibaba digital product offering in the future. The proposed transaction will expand the existing partnership between Alibaba and Youku Tudou saying that Youku Tudou will be integrated into Alibaba’s other business sectors such as media and advertising. Jack Ma the executive chairman of Alibaba stated in an open letter, that his company would be focusing on creating a so-called double H industry or a health and happiness industry.
Youku Tudou has a largest viewer group in China is no doubt the ideal partner to achieve the goal of bringing happiness to people. But analysts said that Alibaba needs more than video viewers especially as the e-commerce giant is suffering in the New York stock exchange because of the slow growth momentum in its online shopping business. An analyst with Analysys International a Beijing based Internet consultancy stated that Alibaba is a group that builds businesses into an ecosystem meaning that every business is connected with each other and synergy is created between different business units.
Apart from e-commerce Alibaba interests in movie, music and sports all can use Youku Tudou as a channel in reaching potential viewers and buyers. Aside from personal computers and mobile phones, those watching programs via television boosting Alibaba’s influence in a home’s living room use Youku Tudou.