Chinese Video Giants Youku and Tudou Signs a Merger

Tudou, an Internet video giant in china has announced that it is going to merge its services with its competitor Youko in a 100% stock-for-stock transaction to build a new service, named Youku Tudou Inc.

Boards of Directors of both the companies have approved the deal, while the deal is currently looking for an approval from shareholders of the companies. According to Tudou, if everything works according to plan, the deal will be finalized in the third quarter of 2012.

This is certainly big news as both these companies are the largest video websites in the country. This deal makes itself identical to what we have already seen in case of a merger between YouTube and VEVO.

Tudou recently announced that it is having 300 million visitors each month, after it went public. One of the major causes of traffic is microblog service Sina Weibo. Sina has also become the world’s second largest video site, thanks to the deal between the two companies.

Both Youko and Tudou are popular for strong rivalry and the deal is certainly a big surprise, considering their battles both in webspace and on the courtroom. At the beginning of this year, Youku filed the latest round of lawsuits, blaming Tudou of misusing copyrighted content.

Regardless of massive rivalry, there have been signs of co-operation as well between the two companies. For instance, in an attempt to turn aside rivalry, both companies agreed upon sharing content last year. And such sort of cooperation raised so many doubts of a merger but no one was sure at that time that this would end up in a real merger.

The founder, chairman and CEO of Tudou, Gary Wang, while commenting on the deal said:

Youku and Tudou share a vision for the future of online video in China and how to deliver the best user experience possible. This transaction further strengthens our market position as Tudou brings its valuable brand, library of professional licensed content, user generated content platform, extensive user base, broad range of partnerships and expertise in mobile video.

Together, we believe Youku Tudou Inc. will be able to provide the best-in-class experience for users interested in uploading, watching and sharing videos, and to grow together with our advertisers, and our content and industry partners.

Victor Koo, founder, chairman and CEO at Youku said:

We intend to lead the next phase of online video development in China. 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 monetization capability within the sector.

Youku Tudou Inc. will have the reach and scale to bring our users high quality content at high speeds. The combined company will have the two leading online video brands in China: Youku and Tudou.

Both the companies together have a lot of potential to expand their workings into other areas, as they can offer an access to a wide range of content easily. We have already approached both companies for immediate comments. We will update you as soon as we receive any response.

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