Alibaba intends to make Youku Tudou as a full private company following the plan to buy all of the shares in a buyout scheme that is said to incur a total spending worth $3.5 billion.
In the first half of 2014, Alibaba bought 18.3 percent of company shares of Youku Tudou which is sometimes referred to as the YouTube in China. The early investment is said to have a total cost of $1.22 billion. This time around, it is ready to spend more billions of cold cash in order to own the remaining 81.7 percent of the video streaming site.
Alibaba is bidding $26.60 for every share which is 30 percent higher than the closing price earned by Youku on Thursday.
China's video online industry continues to attract more users with over 461 million accessing content as of June this year. From this number, 351 million were found to have accessed video online content using their mobile devices. The record is based on the information delivered by the China Internet Network Information Center.
Youku saw an increase of 15 percent this year. On Thursday, it continued to climb 4.9 percent to $20.43.
If plans push through, Alibaba's acquisition of Youku will be the company's 25th acquisition for the year. According to Bloomberg, Alibaba's purchases in 2015 have an average frequency of two acquisitions in every month wherein transactions are said to have reached $13.4 billion.
Youku Tudou CEO Viktor Koo, who is also the company's founder and chairman, has reportedly agreed to give his support to the acquisition deal. Part of the deal includes the creation of a special committee which will be made up of two independent directors.
"Digital products, especially video, are just as important as physical goods in e-commerce," said Daniel Zhang, Alibaba Chief Executive, in a statement. "Youku's high-quality video content will be a core component of Alibaba's digital product offering in the future."
The acquisition of Youku Tudou will allow Alibaba to deliver films and drama series from the U.S. into more than a third of the population in China as the company goes on a head to head battle with rival Internet giants Baidu and Tencent. The deal came following Jack Ma's visit to Hollywood where his meeting with studio executives eventually led to an investment in the recent film "Mission: Impossible."
"Baidu and Tencent have been very aggressive," said Li Chao, an analyst at Internet consultant firm IResearch that is based in Beijing. "Taking control of Youku creates more synergy and allows the unit to work better with Alibaba's film unit."
