Sina Corp (新浪), owner of China’s third-most popular Web site, paid US$66.4 million for a stake in Tudou Holdings Ltd (土豆) to boost its investments in online video services.
Sina acquired 1.075 million American depositary receipts (ADRs) at Shanghai-based Tudou’s initial public offering (IPO) in the US this month for US$31.2 million, it said in a filing to the US Securities and Exchanges Commission on Monday.
Sina spent US$35.2 million for an additional 1.49 million Tudou ADRs after the listing, taking the total holding to 9.05 percent, according to the filing.
Sina is adding video, social networking and electronic commerce services to attract users in the world’s biggest Internet market. The investment in Tudou, China’s second-biggest video Web site, follows Sina’s acquisition of a minority stake in online apparel retailer Mecox Lane Ltd this year.
Tudou is open to “strategic business cooperation in multiple areas” with Sina, it said in an e-mailed statement today.
Sina’s investment is “financial” in nature, Tudou said.
Sina, based in Shanghai, said in May it planned to spend US$100 million to develop its Weibo microblogging service to attract social-networking users.
Tudou has declined about 11 percent in trading on the NASDAQ stock market since its US$174 million IPO.
Tudou ADRs rose 2.5 percent to US$25.73 in US trading on Monday, compared with their IPO price of US$29. The company said it planned to use proceeds from its listing to acquire video content and upgrade technology, as competition with Youku.com Inc (優酷) intensifies.
Tudou founder and CEO Gary Wang (王微) had his stake in the video company cut to 8.6 percent from 12.7 percent following the IPO, according to Tudou’s prospectus.
Tudou’s site offers movies, TV series and content it produces, as well as user-generated videos like those found on Google Inc’s YouTube.
Tudou accounted for 14 percent of online video advertising revenues in China at the end of June, compared with 17 percent at the end of last year, while Youku gained 2 percentage points to 23 percent and Sohu.com Inc’s video site jumped to 13 percent from 7.9 percent, according to data from Analysys International.