China's internet giants hunt for acquisitions to plug service gaps
In a bid to plug gaps in their offerings, mainland internet firms look to buy suitable smaller rivals
The mainland's internet giants are in the midst of a digital land grab, looking for targets to plug gaps in their business, much as Facebook is doing with its US$19 billion purchase of WhatsApp.
Tencent, Asia's largest internet company, Alibaba Group and Baidu are on the hunt for acquisitions as they vie for the mainland's 618 million web users. Citigroup sees the trio driving internet-related deals in China to a record this year, adding to their 44 announced acquisitions since 2012 valued at US$18.7 billion, according to data.
"It's going to be a pretty hot M&A space for the next couple of years and that's really just driven by competition between the three largest players," said Cheng Cheng, an analyst at Pacific Crest.
Internet-related companies worldwide have already announced US$27.5 billion of deals this year, led by the Facebook-WhatsApp acquisition, data shows.
Facebook's purchase of WhatsApp, the social media giant's biggest yet, is aimed at getting a hold of the mobile-messaging service's 450 million users to stay at the centre of consumers' digital lives. In related deals, SoftBank, which controls the third-largest US wireless operator Sprint, is seeking to buy a stake in Naver's text-messaging service Line, sources said.