China's Baidu to Acquire Majority Stake in Renren's E-Commerce Unit
China's biggest search engine, Baidu, has signed a deal with Renren to buy the social networking site's e-commerce unit, Nuomi, for around $160 million in cash.
Baidu will buy a stake of around 59 percent, and the acquisition is expected to close in the fourth quarter, the groups said.
Baidu has been on a buying spree in recent months as the Chinese online space experiences a heady period of consolidation. Last week, it bought NetDragon's 91 Wireless Websoft for $1.9 billion, and in May it spent $370 million on PPS's video business. The deals are seen as diversifying Baidu's revenue.
Renren founded Nuomi in 2010. In the second quarter, the unit generated around $120 million in general merchandise sales and had 3.8 million active paying users, 30 percent of them on mobile devices.
"Nuomi's group-buying platform and high-quality local information clearly complement Baidu's existing mobile LBS and maps offering," said Jennifer Li, chief financial officer of Baidu.
"Nuomi's broad geographical sales coverage and established consumer base will be instrumental in helping Baidu build out our LBS platform for local merchants," she said.
Joseph Chen, chairman and CEO of Renren, said he believed the group-buying business had tremendous potential in China, especially from mobile Internet.
Renren.com had approximately 194 million activated users as of June 30.
"Baidu's strategic investment will further enhance Nuomi's position in this sector, and we are very excited about the synergies it creates. We look forward to Nuomi's great prospects and the value it will bring to its shareholders," said Chen.