Advanced Television

Youku, Tudou create China’s leading online video company

March 13, 2012

Chinese Internet television company Youku and Internet video company Tudou Holdings have signed a definitive merger agreement for Tudou to combine with Youku in a 100 per cent stock-for-stock transaction.

Upon completion, the combined entity will be named ‘Youku Tudou Inc’. Youku’s ADSs will continue to be listed on the NYSE under the symbol ‘YOKU’.

“We intend to lead the next phase of online video development in China. Youku Tudou Inc. will represent a differentiated leader in the online video market in China with the largest user base, most comprehensive content library, most advanced bandwidth infrastructure and strongest monetisation capability within the sector,” said Victor Koo, founder, chairman and chief executive officer of Youku. “Youku Tudou Inc. will have the reach and scale to bring our users high quality content at high speeds. The combined company will have the two leading online video brands in China: Youku and Tudou.”

“Youku and Tudou share a vision for the future of online video in China and how to deliver the best user experience possible,” said Gary Wang, founder, chairman and chief executive officer of Tudou. “This transaction further strengthens our market position as Tudou brings its valuable brand, library of professional licensed content, user generated content platform, extensive user base, broad range of partnerships and expertise in mobile video. Together, we believe Youku Tudou Inc. will be able to provide the best-in-class experience for users interested in uploading, watching and sharing videos, and to grow together with our advertisers, and our content and industry partners.”

“When the strategic combination is complete, Tudou will retain its distinct brand identity and platform in Youku Tudou Inc., strengthening and complementing Youku’s video business. Youku Tudou Inc. would establish a clear and dominant leadership position in China’s online video sector and become one of the largest Internet properties in China. This transaction would also lead to improvement in the industry structure and the underlying economics of the online video sector in China,” added Koo. “We expect to see significant synergies across a number of areas including leveraging licensed content over a larger user base and realising efficiencies in bandwidth management and other common expenses.”

The strategic combination has been approved by both companies’ boards of directors and is subject to customary closing conditions including shareholder approvals by Youku’s and Tudou’s shareholders. Shareholders of Youku and Tudou with representatives serving on the companies’ respective boards of directors have committed to vote in favour of the strategic combination. The combination is expected to close in the third quarter of 2012.

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