Baidu cautious on acquisitions as giants rush to strike deals
While Tencent and Alibaba set the pace on acquisitions, the search giant is easing up as it hones a strategy that favours controlling stakes
China's internet sector recorded its busiest period for mergers and acquisitions last year as cash-rich online giants Tencent, Alibaba and Baidu led the way with a spate of major transactions.
It could be a busier period this year, except for online search kingpin Baidu's apparent decision to slow down the pace rather than join its peers in a pell-mell rush to strike deals.
There was no bigger acquisition in the market last year than Baidu's takeover of mobile applications platform 91 Wireless, a subsidiary of online games developer NetDragon Websoft, for US$1.9 billion.
That transaction, which was executed in July, was considered an "important turning point" because it helped boost overall market sentiment and set a high bar for valuation in acquisitions, Alicia Yap, the head of China investment research at Barclays, said in a report.
Yet Baidu has opted to remain quiet on the acquisition trail after making other significant purchases a year ago, including online video platform PPS, group-buying site Nuomi and Beijing Huanxiang Zongheng, the online literature business of games company Perfect World.
"Baidu is trying a different approach. So far this year, Baidu has not been as active as either Tencent or Alibaba," said Jeff Hao, an analyst at China Merchants Securities.