Alibaba Group Holding Ltd. and founder Jack Ma’s Yunfeng Capital agreed to buy a $1.22 billion stake in video website Youku Tudou Inc. as China’s biggest e-commerce operator prepares for a U.S. initial public offering. Youku shares fell.
Alibaba will hold about 16.5 percent of Youku while Yunfeng will have about 2 percent, Youku Tudou said in a statement today. The deal will close in the near future, with Alibaba Chief Executive Officer Jonathan Lu to join the board, it said.
The deal gives Alibaba access to China’s biggest online video operator and its customers as Ma bolsters services ahead of an IPO that may be larger than the $16 billion raised by Facebook Inc. in 2012. More than 500 million people in China access the Internet from mobile devices, and Youku Tudou is developing shows for the growing number of consumers in second-and third-tier cities and migrant workers from the interior.
Yunfeng and Alibaba will pay $30.50 per American Depositary Share, Youku Tudou said in the statement. Youku ADRs fell 4.4 percent to $23.09 at 10:12 a.m. in New York, and had dropped 20 percent this year as of April 25.
Read more at Businessweek.