Youku Inc., China’s biggest online video company, won approval from shareholders to acquire competitor Tudou Holdings Ltd., a deal that will extend its lead over websites run by Baidu Inc. and Tencent Holdings Ltd.
Shareholders passed all resolutions at Youku’s shareholders ballot related to the all-stock transaction with Tudou, Ryan Cheung, corporate finance director at Youku, said at the meeting in Hong Kong today. He declined to elaborate on the results.
The combination of China’s two biggest online video companies will help reduce content licensing and network costs, and generate savings of as much as $60 million annually, Youku said in March. Tencent, China’s biggest Internet company, and local search-engine market leader Baidu are upgrading their video sites to add users and boost advertising sales.
Shareholders at Tudou approved the combination with Youku in a separate meeting today, Shanghai-based Tudou said in a statement today.
Youku, based in Beijing, accounted for 20.9 percent of China’s online video market by revenue in the first quarter, compared with 11.5 percent for second-placed Tudou, according to estimates by research company Analysys International. Baidu’s iQiyi unit ranked fourth with 6.7 percent market share, more than Tencent’s 4.7 percent, according to Analysys.
Youku’s American depositary receipts slid 2.4 percent to $18.08 in New York trading. Tudou’s ADRs retreated 1.8 percent to $28.76, giving the company a market capitalization of $1.01 billion.
“Market concern about Youku has shifted from whether the deal would be completed to focusing on its market share after the merger amid intense competition with various other online video companies,” Echo He, a senior analyst at Maxim Group LLC in New York said by phone.
Tudou’s investors will receive 1.595 Youku ADRs for each Tudou ADR they own in the proposed transaction, the companies said in March.
After the completion of the transaction, the combined company will have more than 300 million weekly users, Dele Liu, president of Youku, said on Aug. 6.