Amazon’s successful foray into online video and other streaming digital content has shown the value that digital offerings can bring to e-commerce companies. Now the massive Chinese e-commerce firm Alibaba Group Holding is looking to enter the streaming video market in a big way.
This week Alibaba announced its offer for all outstanding shares of the Chinese video streaming site Youku Tudou, according to Reuters. The cash offer represented a thirty percent premium over the stock’s closing price on Thursday.
Youku Tudou’s chairman, who owns eighteen percent of the company, said he supports the offer. Alibaba already controls about eighteen percent of the shares, after buying a minority stake last year.
The deal would cost Alibaba more than $5 billion, but the company expects the investment to pay off with increased traffic to its retail site. Online video is considered the best way to attract views.
The deal is just the latest involving Chinese owned forms that are listed on U.S. stock exchanges going private by bids from major shareholders. About 30 similar deals have been made this year, suggesting strengthening of the Chinese economy.
The largest previous deal involved the Chinese software company Qihoo 360 Technology, which went private to a group of investors who put up about $10 billion.