By Juro Osawa
HONG KONG--In its latest bid to compete better with rival
Internet firms, Alibaba Group Holding Ltd. said it will buy a 60%
stake in Chinese television-and-film production firm ChinaVision
Media Group Ltd. for $6.24 billion Hong Kong dollars (US$805
million).
The move will allow the Chinese e-commerce company to step into
offering entertainment content and is the latest in a string of
acquisitions as Hangzhou-based Alibaba attempts to get ahead of
rivals Tencent Holdings Ltd. and Baidu Inc. The deal comes on the
heels of Tencent announcing earlier this week that it will buy a
15% stake in China's second-largest e-commerce firm, JD.com, for
$215 million.
In China's Internet sector, the three major players--Alibaba,
social media and gaming firm Tencent and search provider Baidu--are
trying to outcompete one another by buying or forming alliances
with smaller local players. Consolidation in the sector is driven
in part by changes in the way people access online services, as
more Chinese consumers use smartphones as a primary tool to search
on the Internet. Alibaba, Tencent and Baidu are aggressively
seeking alliances that can bring more users to their platforms or
offer content, services or technology they don't already have.
Closely held Alibaba, which is considering going public in what
could be one of the largest Internet-sector initial public
offerings in history, has been facing intense competition from
Tencent. Analysts say Tencent, whose WeChat mobile-messaging
application is massively popular in China, is ahead of Alibaba in
attracting the country's smartphone users.
Alibaba, whose Taobao and Tmall shopping sites dominate China's
e-commerce market, said that its deal with ChinaVision is part of
its "digital entertainment strategy," without elaborating. In late
January, Alibaba started offering mobile videogames through its
Taobao shopping application. ChinaVision's video content could make
Alibaba's e-commerce platform more appealing.
As part of the deal, Hong Kong-listed ChinaVision will issue new
shares to Alibaba at HK$0.50 a share, representing a discount of
22% over ChinaVision's closing share price of HK$0.64 Tuesday.
ChinaVision said the deal with Alibaba will help bolster its
funding capacity, and put it in a better position to capitalize on
its content.
Over the past year, Alibaba has made several acquisitions. Last
month, the company made a $1.13 billion offer to turn AutoNavi
Holdings Ltd. into a wholly owned unit, after it bought a 28% stake
in the mobile map developer last year. Alibaba last year also
bought an 18% stake in Sina Corp.'s Weibo microblog, the Chinese
equivalent of Twitter, as a way to attract mobile users.
Tencent, for its part, paid $448 million last year for a 36.5%
stake in Sogou, a Chinese search engine run by Sohu.com Inc., as
part of a challenge to Baidu. In February, Tencent paid an
undisclosed amount for a 20% stake in restaurant-rating app
Dianping, in a bid to connect WeChat users with on-the-ground
services such as restaurant bookings.
Write to Juro Osawa at juro.osawa@wsj.com
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