Youku Tudou, a leading multi-screen entertainment and media company in China, announced that its Board of Directors received a nonbinding proposal, dated October 16th, 2015, from Alibaba Group Holding Limited (Alibaba) acquire all of the outstanding and ordinary shares of the company at $26.60 price per ADS in cash.
The purchase offer includes the ordinary shares represented by American depositary shares not owned by Alibaba (each ADS represents 18 ordinary shares of the company).
Under Alibaba’s proposal, Youku’s founder, Victor Koo, would continue to lead the business as chairman and chief executive officer.
In May 2014, Alibaba had made an initial strategical investment in Youku and currently owns 18.3% of the outstanding share capital of Youku based on
Youku’s public filings.
According to the proposal letter, Alibaba intends to fund the consideration payable in the Transaction with its cash on hand.
Alibaba wants the support of Youku Tudoou founders
Besides, some shareholders of Youku Tudou, including Victor Koo, Youku Tudou’s founder, Chairman and Chief Executive Officer, Chengwei Capital and several entities affiliated with them have entered into a Support Agreement with Alibaba, dated October 16, 2015, under which such shareholders have agreed, among other things and just as shareholders of the company, using thier shares to vote in favor of the transaction.
Despite Alibaba Group explains that the offer is made with the ssupport by the founding partners of Youku Tudou, the company’s board points that no decisions have been made with respect to the transaction and that Alibaba may not make any definitive offer.
Youku Tudou’s Board has formed a special committee consisting of two independent disinterested directors, Jonathan Jia Zhu and Jixun Foo, to consider the transaction. The special committee will retain independent legal and financial advisors, who will advice them during this process.
A strategical move for Alibaba
“I’ve always admired what Victor has built,” said Alibaba Group executive chairman Jack Ma. “A closer partnership with Youku will give us the opportunity to support Victor and his leadership team to fulfill the dream of building the leading digital entertainment platform in China”.
“We are pleased to submit the proposal to the Youku board of directors,” said Daniel Zhang, chief executive officer of Alibaba Group. “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. Digital products, especially video, are just as important as physical goods in e-commerce, and Youku’s high-quality video content will be a core component of Alibaba’s digital product offering in the future. I look forward to working with Victor and his leadership team to grow our combined digital entertainment business.”
Digital entertainment is core to Alibaba’s strategy of promoting consumption of virtual goods and services, Alibaba pointed. The proposed transaction would expand the existing partnership between Alibaba and Youku, and would combine Alibaba’s unparalleled data-driven platforms in e-commerce, media and advertising with Youku’s market-leading digital video franchise to significantly accelerate Youku’s growth. Youku’s large user base, especially in mobile, and its popular platforms with high user engagement would form one of the key pillars of Alibaba’s digital entertainment strategy.
Youku Tudou is a leading Internet television platform, enabling users to search, view and share high-quality video content quickly and easily across multiple devices. Its Youku brand and Tudou brand are among the most recognized online video brands in China. Youku Tudou’s American depositary shares, each representing 18 of Youku Tudou’s Class A ordinary shares, are traded on the NYSE under the symbol “YOKU.”
A 30.2% premium over the market price
The offer price set in the proposal letter rby Alibaba means a premium of approximately 30.2% over the closing price of the ADSs as quoted by the New York Stock Exchange (the “NYSE”) on October 15, 2015, the last trading day prior to this announcement, and a premium of 44.5% to the volume-weighted average closing price of the ADSs as quoted by the NYSE during the last three months.
Image over the headline.- Alibaba logo. © Alibaba Group.
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