Tudou Holdings Ltd., China’s second-biggest video website, raised $174 million yesterday in its U.S. initial public offering, selling its shares at a discount to its bigger rival.
The Shanghai-based company sold 6 million American depositary receipts at $29 apiece, according to a statement. Tudou had offered the ADRs for $28 to $30 each, according to a regulatory filing. They will start trading today on the Nasdaq Stock Market under the symbol TUDO.
Tudou priced its shares at a 58 percent discount to larger Youku.com Inc. after a rout in equities this month shrank investor appetite for new stock. The IPO also follows a report last week that Baidu Inc., China’s biggest Internet search site, had approached the video provider about a takeover.
The IPO price values Tudou at $822 million, or about one-third the size of Youku.com, which has a market value of $2.7 billion.
It also values Tudou at about 16 times sales in the 12 months through March 31. At the close of trading yesterday on the New York Stock Exchange, Youku.com traded at 37 times sales for the same period.
Tudou’s IPO proceeds will be used for technology upgrades, bandwidth expansion and rights to videos as it vies for visitors in the world’s biggest online market. The site offers movies, TV series and content it produces itself, as well as user-generated videos such as are found on Google Inc.’s YouTube.
Falling Market Share
The company accounted for 14 percent of online-video advertising revenue in China at the end of the second quarter, compared with 17 percent at the end of 2010, while Youku gained two percentage points to 23 percent and Sohu.com Inc.’s video site jumped to 13 percent from 7.9 percent, according to data from Beijing-based researcher Analysys International.
Another 28 percent of the market is split among five competitors including Baidu’s Qiyi.com; a site operated by Xunlei Ltd., which is part-owned by Google; and Nasdaq-listed Ku6 Media Co., the data show.
China had 485 million Internet users at the end of June, according to data from the government-sponsored China Internet Network Information Center. There were about 215 million Internet users in the U.S. as of July, according to Reston, Virginia-based researcher ComScore Inc.
Tudou completed its offering after 13 U.S. IPOs were withdrawn or postponed from Aug. 7 to Aug. 12, the most in a week since 2000, according to data compiled by Bloomberg. Each of Tudou’s ADRs represent four Class B ordinary shares. Credit Suisse Group AG and Deutsche Bank AG led the offering.