Youku Inc. is China’s leading video site. It is rivaled by a rather smaller video site, Tudou. It has now been learned that the two giants have reached an agreement so that both will merge to give birth to what is being cited as ‘one of the largest internet properties in China.’ Given the fact that the two companies have been rivals in the past, been accused by one another of copyrights infringement, it comes as a surprise that the two have decided to merge.
The merger may be owed to the fact that the two companies have been struggling to get adequate profits out of China’s online market. The new company, an outcome of the merger, has been named Youku Tudou Inc. A merge of this nature can pose a serious threat to other contestants in the online advertising arena of China. These contestants include the likes of Baidu Inc. and Tencent Holdings Ltd.
According to founder and chief executive of Youku, “Youku Tudou Inc. would establish a clear and dominant leadership position in China’s online video sector and become one of the largest Internet properties in China. This transaction would also lead to improvement in the industry structure and the underlying economics of the online video sector in China.”
As per the agreement that has been reached, shareholders of Tudou would trade their shares for Youku’s. Earlier, both have been New York-listen companies and now, after this merger, Youku will continue to be listed under the New York Stock Exchange.