Alibaba continues spending spree with Youku Tudou buyout

Chinese e-commerce giant confirms it is buying out the remaining shares in the online video website, in a deal valued at about US$3.7 billion.

Alibaba has finalised its plans to acquire the remaining shares of China's popular online video site, Youku Tudou, in an all-cash transaction estimated to be worth some US$3.7 billion.

The deal would see Youku shareholders receive US$27.6 per American Depositary Share, which was higher than its initial offer in October of US$26.6 per share. The company's share closed at US$26.14 end of trading Friday when the acquisition was announced. It launched its IPO in December 2010 at US$12.8 per share, offering some 15.84 million shares.

Alibaba previously held 18.3 percent share in the online video company. With the merger, the former would gain access to more than 580 million online video users a month, further bolstering its play in the Chinese digital media market.

In the joint statement, Youku Tudou said its board of directors unanimously approved the merger and "recommends that shareholders" also would vote to authorise and approve the buyout.

Youku Tudou Chairman and CEO said: "We are eager to work with Alibaba to grow our multi-screen entertainment and media ecosystem. We are confident that we will strengthen our market position and further accelerate our growth through the integration of our advertising and consumer businesses with Alibaba's platform and Alipay services."

The deal is expected to be finalised in the first quarter of 2016. Upon its completion, Koo would remain as chairman and CEO of Youku Tudou, which shares then would be taken off the New York Stock Exchange.

The announcement comes as Alibaba faces criticism of its slowing growth, though it recently posted a 32 percent revenue increase for its second quarter. The Chinese internet company also had been pumping in money to grow its cloud business and expand its e-commerce infrastructure in the region.