HONG KONG – Alibaba and Yunfeng Capital, a private equity company controlled by Alibaba’s founder, Jack Ma, agreed to acquire a combined 18.5 percent stake in Youku Tudou, which broadcasts a series of popular television programs and other videos over the Internet.  Alibaba will acquire a 16.5 percent stake in Youku Tudou while Yunfeng is taking a 2 percent stake, buying a total of 707 million new shares and 13.8 million existing shares at a price equal to $30.50 a share of the company’s New York-listed stock. That is about 26 percent above the $24.14 level at which Youku Tudou’s American depositary shares closed on Friday.  Alibaba is moving forward with plans for an initial public offering in the United States that could be bigger than Facebook‘s $16 billion listing two years ago. The investment in Youku Tudou comes as Chinese regulators are paying closer attention to online video content. Over the weekend, Beijing ordered websites to stop broadcasts of four popular American television programs.  Shares in Youku Tudou jumped last month after Chinese news reports said Tencent, a giant Chinese social messaging and video game company that is Alibaba’s biggest rival, would pay more than $300 million for a 20 percent stake. But no deal was announced, and Youku Tudou said at the time that it would not comment on the speculation.  Alibaba and Tencent have been locked in a battle of buyouts in recent months, with each company making acquisitions to expand into the other’s core business area.  Tencent agreed on March 10 to pay $215 million for a 15 percent stake in JD.com, which is China’s No. 2 e-commerce company, after Alibaba. Alibaba fired back the next day, saying it would pay about $800 million for a 60 percent stake in ChinaVision, a company that invests in film, television, newspapers and online multimedia businesses in China.  As part of Alibaba’s latest deal, its chief executive, Jonathan Lu, will gain a seat on the board of Youku Tudou, which was formed in 2012 when Youku bought Tudou, a rival online television company, in a $1.1 billion deal.  The investment by Alibaba “will help us continue to build an immersive cultural entertainment platform that integrates online and offline entertainment,” Victor Koo, the chairman and chief executive of Youku Tudou, said Monday in a statement.  “We are excited to cooperate and work closely with Victor and his team to support their innovation in this key emerging space as well as accelerate our digital entertainment and video content strategy,” Mr. Ma, Alibaba’s founder, said in the statement. “This is an important strategic initiative that will further extend the Alibaba ecosystem and bring new products and services to Alibaba’s customers.”  Youku Tudou is being advised on the deal by Goldman Sachs, while Alibaba is being advised by Morgan Stanley.
The e-commerce giant’s deal for a minority stake in Youku Tudou extends a recent frenzy of acquisitions in China’s fast-growing technology sector.