China’s Leading Video Websites to Merge

BEIJING/SHANGHAI: China’s two leading online video services are combining forces, as Youku is buying rival Tudou in a deal valued at more than $1 billion.

Youku is planning to acquire the smaller competitor Tudou Holding in an all-stock deal, worth approximately $1 billion. The merger is expected to close in Q3.

"We intend to lead the next phase of online video development in China. Youku Tudou Inc. will represent a differentiated leader in the online video market in China with the largest user base, most comprehensive content library, most advanced bandwidth infrastructure and strongest monetization capability within the sector," said Victor Koo, the founder, chairman and CEO of Youku. "Youku Tudou Inc. will have the reach and scale to bring our users high quality content at high speeds. The combined company will have the two leading online video brands in China: Youku and Tudou."

"Youku and Tudou share a vision for the future of online video in China and how to deliver the best user experience possible," added Gary Wang, the founder, chairman and CEO of Tudou. "This transaction further strengthens our market position as Tudou brings its valuable brand, library of professional licensed content, user generated content platform, extensive user base, broad range of partnerships and expertise in mobile video. Together, we believe Youku Tudou Inc. will be able to provide the best-in-class experience for users interested in uploading, watching and sharing videos, and to grow together with our advertisers, and our content and industry partners."

"When the strategic combination is complete, Tudou will retain its distinct brand identity and platform in Youku Tudou Inc., strengthening and complementing Youku’s video business. Youku Tudou Inc. would establish a clear and dominant leadership position in China’s online video sector and become one of the largest Internet properties in China. This transaction would also lead to improvement in the industry structure and the underlying economics of the online video sector in China," continued Koo. "We expect to see significant synergies across a number of areas including leveraging licensed content over a larger user base and realizing efficiencies in bandwidth management and other common expenses."