Aug. 30 (Bloomberg) -- Sina Corp., owner of China’s third-most popular website, paid $66.4 million for a stake in Tudou Holdings Ltd. to boost its investments in online video services.
Sina acquired 1.075 million American depositary receipts at Shanghai-based Tudou’s initial public offering in the U.S. this month for $31.2 million, it said in a filing to the Securities and Exchanges Commission yesterday. Sina spent $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 website, 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 plans to spend $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 $174 million IPO.
Tudou ADRs rose 2.5 percent to $25.73 in U.S. trading yesterday, compared with their IPO price of $29. The company said it plans to use proceeds from its listing to acquire video content and upgrade technology, as competition with bigger rival Youku.com Inc. intensifies.
Gary Wang, founder and chief executive officer at Tudou, 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 such as are found on Google Inc.’s YouTube.
Tudou accounted for 14 percent of online-video advertising revenue in China at the end of June, 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 Analysys International.
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