Chinese Internet Giant Alibaba to Buy $1.2 Billion Stake in Online Video Powerhouse Youku Tudou

Jack Ma Alibaba H

A group composed of Alibaba, in which Yahoo owns a stake, and Yunfeng Capital will acquire an 18.5 percent stake in the company.

Chinese online retail giant Alibaba, which is currently planning an IPO and in which Yahoo owns a stake, will partner with Yunfeng Capital to buy an 18.5 percent stake in China’s leading online video company Youku Tudou.

"We are very pleased to have Alibaba as our strategic investor. Alibaba's investment will strengthen Youku Tudou as China's largest online video platform and further differentiate our services and user experience,” Victor Koo, chairman and CEO of Youku Tudou, said in announcing the deal Monday.

“It will help us continue to build an immersive cultural entertainment platform that integrates online and offline entertainment," said Koo.

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The two companies will invest an aggregate of approximately $1.22 billion to purchase 707.250 million new shares and 13.9 million existing shares at $1.6944 per share, corresponding to US$30.50 per American Depositary Share of the company, each representing 18 Class A ordinary shares. 

The transaction is expected to close in the near future and Jonathan Lu, CEO of Alibaba, will join Youku Tudou's board of directors upon completion of the transaction. Alibaba's IPO is expected to value the company at $168 billion.

"We are excited to cooperate and work closely with Victor and his team to support their innovation in this key emerging space as well as accelerate our digital entertainment and video content strategy," said Jack Ma, founder and executive chairman of Alibaba.

"This is an important strategic initiative that will further extend the Alibaba ecosystem and bring new products and services to Alibaba's customers."