Skadden, Arps, Slate, Meagher & Flom and Kirkland & Ellis have taken the lead in the merger of video hosting service Youku.com (Youku) and online video sharing platform developer Tudou Holdings (Tudou). The combination is poised to create China’s largest online video site.
The merger, valued at over $1 billion, saw Youku acquiring all the shares of smaller rival Tudou. The new entity, Youku Toudu Inc, will capture one-third of the market share in China’s competitive Internet video market.
Youku retained Skadden, TransAsia Lawyers, and Conyers Dill & Pearman as its U.S., PRC and offshore counsels respectively. The Hong Kong-based Skadden team was led by partners Michael Gisser and Julie Gao. The latter had advised Youku on its $203 million listing on the New York Stock Exchange in 2010.
Tudou turned to Kirkland & Ellis, Fangda Partners and Maples and Calder for Hong Kong, PRC and offshore legal advice respectively. Kirkland’s Hong Kong partner David Zhang spearheaded Tudou’s $174 million IPO on the Nasdaq in 2011, while he was a partner at Latham & Watkins.
China has more than 450 million Internet users, and Youku currently sits at the top of China’s online video sector, with a 21.8 percent share of that market. Tudou trails behind with an online video market share of 13.7 percent, according to data from Analysys International, an Internet research firm.
The deal is expected to close in the third quarter of this year, with approvals pending from both companies’ shareholders, said a joint statement from both parties.
“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 Youku’s founder, chairman and CEO Victor Koo in the statement.
China’s Internet giants such as Sohu.com, Baidu, and Tencent Holdings are mulling on their own online video hosting platforms.
Earlier this year, Youku sued Tudou for 4.8 million yuan ($762,000) in compensation. According to a February report by Xinhua, China’s official news agency, Youku alleged that losses were incurred due to Tudou’s claim that Youku had misused its copyrighted material. The battle began in December 2011 when the two firms traded accusations of stealing and reposting videos from each other’s sites, said Reuters.
Goldman Sachs, Allen & Company and China Renaissance Holdings acted as financial advisers to Youku. Morgan Stanley and Credit Suisse served as financial advisers to Tudou. ALB
Artemisia Ng is Senior Journalist at ALB. Follow us on Twitter: @ALB_Magazine.
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