Alibaba to buy out UCWeb in China's biggest internet merger

BEIJING Wed Jun 11, 2014 7:39pm IST

A woman stands next to a door inside the headquarters of Alibaba in Hangzhou, Zhejiang province, April 23, 2014. REUTERS/Chance Chan/Files

A woman stands next to a door inside the headquarters of Alibaba in Hangzhou, Zhejiang province, April 23, 2014.

Credit: Reuters/Chance Chan/Files

Related Topics

Stocks

   

BEIJING (Reuters) - Alibaba Group Holding Ltd will fully acquire mobile browser firm UCWeb in the biggest merger in Chinese internet history, upping the stakes in its battle with arch-rivals Tencent and Baidu.

Alibaba's purchase of the one-third of UCWeb it didn't already hold emphasises the company's push to do more business on mobile in the world's biggest smartphone market, where it is locking horns with Tencent Holdings Ltd (0700.HK) and Baidu Inc (BIDU.O).

It also adds to a string of acquisitions, including a 50 percent stake in China's most successful football club. Once the deal closes, Alibaba, founded by Jack Ma, will have forked out almost $6 billion since the start of the year.

"Jack Ma has to do everything and anything he can to expand his footprint in the mobile space," said Michael Clendenin, managing director of Shanghai-based RedTech Advisors.

Alibaba and its affiliates' acquisitions since the beginning of 2013 total at least $9.9 billion, according to Reuters calculations. Baidu spent more than $2.4 billion on acquisitions in the same period, while Tencent shelled out more than $1.9 billion.

But Tencent, China's biggest listed internet firm, dominates smartphone screens with its near-ubiquitous mobile messaging app WeChat, a situation which Alibaba executives have referred to as a monopoly.

Baidu, the third of China's internet giants, controls one of the major gateways to the Internet with a 60 percent search market share in May, according to Alibaba-owned data firm CNZZ.

"UCWeb's not a magic bullet for them," said Clendenin. "But Jack Ma's willing to go out and invest in smaller assets that can defend against WeChat."

Alibaba and UCWeb will form the UCWeb Mobile Business Group responsible for internet browsers, search services, location-based services, the mobile gaming platform, mobile application distribution and mobile literature services, UCWeb said in a statement.

"This integration will create the biggest merger in the history of China's Internet," Alibaba said on its microblog, adding that it will be larger than Baidu's $1.9 billion acquisition of 91 Wireless last year. That would value the deal, for about one-third of UCWeb, at more than $630 million, according to Reuters calculations.

Yu will act as chairman of the new business group and become part of Alibaba's strategic decision-making committee, Alibaba said.

The deal will mainly be done using Alibaba's stock, with a smaller part as cash.

($1 = 6.2277 Chinese yuan)

(Additional reporting by Beijing Newsroom and Matthew Miller in HONG KONG; Editing by Stephen Coates and Michael Urquhart)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Tech Results

Reuters Showcase

IBM Chip Unit

IBM Chip Unit

IBM to pay Globalfoundries $1.5 bln to take chip unit  Full Article 

Cost-Cutting

Cost-Cutting

Yahoo set to outline cost-cutting efforts - WSJ.  Full Article 

eBay Board

eBay Board

Marc Andreessen quits eBay board ahead of PayPal spinoff  Full Article 

Cyber Security

Cyber Security

Wall Street urges U.S. regulators' joint cybersecurity approach  Full Article 

Facebook Stake

Facebook Stake

Fidelity Contrafund loads up on Facebook and it pays off  Full Article 

App for Kids

App for Kids

New apps bring kids' playtime back to real world  Full Article 

'Robotic Eyes'

'Robotic Eyes'

Helps Japan's bipedal bot run faster.  Video 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage