Chinese e-commerce giant Alibaba announced today that it is finalizing its purchase of Youku Tudou in an all-cash deal worth about $3.67 billion.
Alibaba already owned 18.3% of Youku Tudou, which it bought for $1.2 billion in 2014.
Alibaba is offering $27.60 per share, which according to the company is a premium of 35.1% over the closing price of Youku Tudou’s stock on Oct. 15 — one day prior to the date that Youku Tudou announced it had received a “going private” proposal from Alibaba — and a premium of 49.9% over the average closing price during the three months prior. The original non-binding purchase proposal on Oct. 15 offered $26.60 per share.
YouKu Tudou was created in 2012 by the merger of streaming site Youku Inc. and its smaller competitor Tudou Holdings Ltd. in a $1 billion stock swap. It is one of China’s two largest streaming providers, alongside Tencent, drawing 500 million monthly users with a mix of movies and TV shows, both licensed and produced in-house, and user-generated content.
Youku Tudou’s board of directors have unanimously approved the merger agreement and recommended that its shareholders vote to approve the sale.
“We believe this combination with Alibaba maximizes value for Youku Tudou shareholders and significantly benefits our customers, users and team,” said Victor Koo, chairman and CEO of Youku Tudou, in a statement. “We are eager to work with Alibaba to grow our multi-screen entertainment and media ecosystem. 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. With Alibaba’s support, Youku Tudou’s future as the leading multi-screen entertainment and media platform in China has been firmly secured.”