Hangzhou, China, October 16, 2015 – Alibaba Group (NYSE:BABA) today announced that it made a non binding proposal to the board of directors of Youku Tudou Inc. (NYSE:YOKU) ("Youku") to acquire all outstanding shares of Youku, including shares represented by American depositary shares ("ADSs," each representing 18 ordinary shares of Youku), that it does not already own for US$26.60 per ADS in an all-cash transaction. The proposal is subject to satisfactory completion of due diligence by Alibaba and the negotiation of a mutually acceptable definitive merger agreement. In May 2014, Alibaba made an initial strategic investment in Youku and owns 18.3% of the outstanding share capital of Youku based on Youku's public filings.
Digital entertainment is core to Alibaba's strategy of promoting consumption of virtual goods and services. The proposed transaction would expand the existing partnership between Alibaba and Youku, and would combine Alibaba's unparalleled data-driven platforms in e-commerce, media and advertising with Youku's market-leading digital video franchise to significantly accelerate Youku's growth. Youku's large user base, especially in mobile, and its popular platforms with high user engagement would form one of the key pillars of Alibaba's digital entertainment strategy. Under Alibaba's proposal, Youku's founder, Victor Koo, would continue to lead the business as chairman and chief executive officer.
"We are pleased to submit the proposal to the Youku board of directors," said Daniel Zhang, chief executive officer of Alibaba Group. "We believe that the proposed transaction, with tighter integration of our resources, will help Youku achieve exciting growth in the years ahead by leveraging Alibaba's assets in living-room entertainment, e-commerce, advertising and data analytics. Digital products, especially video, are just as important as physical goods in e-commerce, and Youku's high-quality video content will be a core component of Alibaba's digital product offering in the future. I look forward to working with Victor and his leadership team to grow our combined digital entertainment business."
"I've always admired what Victor has built," said Alibaba Group executive chairman Jack Ma. "A closer partnership with Youku will give us the opportunity to support Victor and his leadership team to fulfill the dream of building the leading digital entertainment platform in China".
Alibaba is making the proposal with the support of the founding shareholders of Youku, including Victor Koo, Chengwei Capital and their affiliates.
Webcast and Conference Call Information
Alibaba Group's management will hold a conference call to discuss the announcement at 8:00 p.m. Hong Kong Time (8:00 a.m. U.S. Eastern Time) on October 16, 2015.
Details of the conference call are as follows:
International: +65 6713 5521
U.S.: +1 347 549 4095
U.K.: +44 203 713 5083
Hong Kong: +852 3018 6768
China: 400 624 0406 or 800 870 0531
Conference ID: 62411957
A webcast of this conference call will be available on Alibaba Group's Investor Relations website located at http://alibabagroup.com/en/ir/home. A replay of the conference call will be available for one week (dial-in number: +61 2 9003 4211; conference ID: 62411957).
About Alibaba Group
Alibaba Group's mission is to make it easy to do business anywhere. The company is the largest online and mobile commerce company in the world in terms of gross merchandise volume. Founded in 1999, the company provides the fundamental technology infrastructure and marketing reach to help businesses leverage the power of the Internet to establish an online presence and conduct commerce with hundreds of millions of consumers and other businesses.
Alibaba Group's major businesses include:
Safe Harbor Statements
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The proposal sent to the board of directors of Youku is set forth below:
October 16, 2015
The Board of Directors
Youku Tudou Inc.
7/F, Tower B, World Trade Center
No. 36 North Third Ring Road, Dongcheng District
Beijing 100029, People's Republic of China
Dear Members of the Board of Directors:
Alibaba Group Holding Limited ("Alibaba," "we," or "us") is pleased to submit this non-binding proposal to acquire all of the outstanding Class A and Class B ordinary shares of Youku Tudou Inc. (the "Company") and American depositary shares ("ADSs", each representing 18 Class A ordinary shares of the Company) not already owned by us in a going private transaction (the "Acquisition") on the principal terms and conditions described in this letter.
We believe our proposal provides an attractive opportunity for the Company's shareholders to realize superior value that is otherwise difficult for the Company to achieve as a stand-alone company. The online video industry has become increasingly challenging, with an increasingly competitive landscape and higher content acquisition costs, as several larger Internet players in China have become major competitors to the Company. We believe that Alibaba is uniquely positioned to partner with the Company to build a leading digital entertainment platform in China. We contemplate that the Company's founder, Victor Koo, would continue to lead the Company's business as chairman and chief executive officer.
Our proposal of US$26.60 per ADS represents a premium of 30.2% to the closing price of the ADSs on October 15, 2015 and a premium of 44.5% to the volume-weighted average closing price of the ADSs during the last three (3) months. Taking into account the Company's net cash position as of June 30, 2015 as set forth in the Company's public filings, our proposal represents a premium of 41.5% to the Company's enterprise value based on the closing price of the ADSs on October 15, 2015 and a premium of 63.8% based on the volume-weighted average closing price of the ADSs during the last three (3) months.
We are confident that the Acquisition can be closed on an expedited basis as outlined in this letter.
The key terms of our proposal are set forth below.
We will be very focused on completing the Acquisition and hope that you are interested in promptly proceeding in a manner consistent with our proposal. We believe that the Acquisition will provide a compelling opportunity for the Company's shareholders to realize superior value on an expedited timeframe with a high degree of certainty of closing.
Should you have any questions concerning this proposal, please feel free to contact us at any time. We look forward to hearing from you.
ALIBABA GROUP HOLDING LIMITED
By: /s/ Joseph C. Tsai
Name: Joseph C. Tsai
Title: Executive Vice Chairman