Shareholders give go-ahead for Youku-Tudou merger
Shareholders endorse plan to form country's 'second-biggest internet company'
Youku, operator of China's biggest internet video service, and smaller rival Tudou have approval from their shareholders to merge.
"The parties expect to complete the merger as soon as practicable," Beijing-based Youku said in a statement after its annual general meeting of shareholders yesterday.
The combined entity, to be named Youku Tudou, is expected to take the lead in development of online video services in China and become the mainland's second-biggest internet company by users, according to Youku chairman and chief executive Victor Koo Wing-cheung.
It would also keep at bay the ambitious partnership, announced in April, between the internet video business units of mainland online giants Tencent, Baidu and Sohu.com.
Youku shareholders voted in favour of issuing Class-A ordinary shares as consideration for the merger, a deal that was reported in March to be worth about US$1.04 billion. Youku is listed on the New York stock exchange, while Tudou trades on the Nasdaq.
At Tudou's shareholders' meeting, the Shanghai-based firm got the green light to be taken private and its American depositary shares delisted from the Nasdaq Global Market pursuant to the merger agreement. Tudou will become a wholly owned subsidiary of Youku.
A JPMorgan Asia-Pacific Equity Research report said the Youku and Tudou online video portals had more than 300 million users weekly. The mainland's total online population swelled to 538 million at the end of June.
Youku president Liu Dele confirmed earlier this month that the merged entity would generate annual cost savings of US$50 million to US$60 million. Although the new entity will own two separate online platforms with two differentiated brands, JPMorgan said back-end operations would be integrated. These include advertising systems and product development.