Alibaba makes cash offer for remainder of Youku Tudou

E-commerce titan Alibaba Group Holding has proposed to buy all the outstanding shares that it does not own in Youku Tudou, China's leading online video-services provider, for US$4.6 billion in a proposed cash transaction of US$26.60 a share.

That valued the entire Youku Tudou business at US$4.2 billion, based on the company's outstanding shares as of December 31.

"We believe that the proposed transaction, with tighter integration of our resources, will help Youku achieve exciting growth in the years ahead by leveraging Alibaba's assets in living-room entertainment, e-commerce, advertising and data analytics," Alibaba chief executive Daniel Zhang Yong said in a statement on Friday.

New York-listed Alibaba, the world's largest e-commerce-services provider, and Yunfeng Capital, a private equity firm co-founded by Alibaba executive chairman Jack Ma Yun, teamed up in May last year to acquire a combined 18.5 per cent stake in Youku for US$1.2 billion. Alibaba's current shareholding is 18.3 per cent.

According to Alibaba, Youku would form one of the "key pillars" of its digital entertainment strategy.

"Digital products, especially video, are just as important as physical goods in e-commerce," Zhang said.