Alibaba Business Will Get Boost From Deal, UCWeb Says

Alibaba Group Holding Ltd.’s purchase of the rest of UCWeb Inc. will help China’s largest e-commerce company boost its mobile-search business as it prepares for an initial public offering, a UCWeb executive said.

UCWeb is valued at more than double the $1.9 billion paid by Baidu Inc. last year for 91 Wireless Websoft Ltd., Yu Yongfu, president of Alibaba UCWeb Mobile Business Group, said during a briefing in Beijing today. He didn’t disclose the price.

Alibaba, which is readying for an IPO in New York, has been valued at $168 billion, based on the average estimate of 12 analysts surveyed by Bloomberg News in April. Adding UCWeb and its application store also helps Alibaba strengthen its game-distribution business in markets including India and Russia while competing for the attentions of China’s 618 million Internet users.

“Mobile search is a blue sea, so there is a lot of potential growth in that sector,” said Sam Gu, a Hong Kong-based analyst at First Shanghai Securities Ltd. by phone. “UCWeb could help Alibaba increase its Web traffic.”

Youku, Weibo

About 3,000 workers from UCWeb will join Alibaba as the business is fully integrated, the companies said in a joint statement yesterday. Alibaba originally held a 66 percent stake in UCWeb through convertible preferred shares, according to a filing in May.

Beijing-based UCWeb will work with Alibaba on data management and also will explore opportunities with Alibaba-backed companies including Youku Tudou Inc. and Weibo Corp., Yu said. The two will consolidate their location-based services, he added.

UCWeb is planning to boost its investment budget from an original projection of 5 billion yuan ($800 million) in the three years through 2015 as it tries to attract 200 million users for its new mobile-search application, called Shenma, by the end of this year, Yu said.

UCWeb started offering its mobile game stores overseas, targeting Russia, Indonesia, India and Vietnam, this year. Net income from games could surpass $100 million this year and $250 million in 2015, Yu said without disclosing the current figures.

Billionaire Jack Ma, executive chairman of Hangzhou-based Alibaba, joined UCWeb’s board in August.