Alibaba Group Holding has announced that it will acquire mobile browser company UCWeb in what will be the largest merger in Chinese Internet history.
Alibaba's acquisition of UCWeb, which comes after a series of investments that total $4.8 billion over the past half year, will have a price that will be higher than Baidu's $1.9 billion purchase of 91 Wireless last year.
Alibaba's acquisition of UCWeb will allow the company to include Internet browsers and an app store to its mobile device services.
The cash and stock deal, which purchased the remaining shares that Alibaba did not yet own, will see a full integration of UCWeb into Alibaba, with 3,000 workers being assimilated into the company. The merger will form the UCWeb Mobile Business Group, which will be responsible for "Internet browsers, search services, location-based services, the mobile gaming platform, mobile application distribution and mobile literature services."
Alibaba already had a 66 percent stake in the company before the acquisition. Jack Ma, Alibaba's Executive Chairman, became a member of UCWeb's board in August last year.
Alibaba's purchase of UCWeb shows the company's emphasis on to drive up its business on mobile devices in China, which happens to be the largest smartphone market in the world. Alibaba is currently locked in a battle with Tencent Holdings in the mobile Internet space.
Tencent Holdings is the largest listed Internet firm in China, with a dominance in the smartphone market primarily because of its WeChat messaging app.
"UCWeb has done great in its mobile browser business; it could work with Alibaba on developing mobile search engines going forward," said ICBC International Research Ltd. analyst You Na. "UCWeb could also work with Alibaba's mapping unit to provide location-based services."
UCWeb had intended to increase spending by 67 percent to about $803 million in the three years through 2015 for product development and overseas expansion, said UCWeb then-CEO Yu Yongfu in an interview in May. The company was aiming to reach a user base of 1 billion, with half of the figure coming from overseas. Yu will become the president of the UCWeb unit.
UCWeb has been profitable since 2009, with the company's revenue doubling in each of the past three years. The company was also planning an initial public offering, with Yu preferring the company going public in the U.S., but that will be shelved with the integration into the Alibaba Group.
Alibaba's spending spree on investments comes ahead of the company's planned IPO in the U.S. The company's co-founders are reportedly targeting an Aug. 8 date for the offering, which could value the company at over $150 billion.
