Two mainland internet firms are setting aside their bitter rivalry to merge, in a record-breaking deal to create the country's biggest online video-services provider - though they still must prove they are profitable.
Youku and Tudou, both Nasdaq-listed internet video companies, said yesterday they had signed an agreement for Tudou to combine with Youku in a 100 per cent stock-for-stock transaction. The new company will be called Youku Tudou Inc.
The merger is valued at US$1.04 billion, according to Thomson Reuters, making it the biggest mainland internet deal by stock swap on record.
Youku is the mainland's largest online video-services provider and the second-largest worldwide, behind YouTube, according to Comscore. YouTube is barred on the mainland.
The deal marks a milestone for the two former rivals, which have locked horns in court over alleged copyright infringement and unfair competitive practices.
Other leading players in the mainland's online market include v.qq.com, ku6.com, tv.sohu.com and PPLive. Youku held a 21.8 per cent market share as of December 2011, while Tudou, ranked No 3, had 13.7 per cent, according to Beijing-based research firm Analysys International.
'We intend to lead the next phase of online video development in China,' Youku's founder, chairman and chief executive, Victor Koo, said in a statement.
