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 and Baidu Inc.
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
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
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
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"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)
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