Sina Corp, owner of China's third-most popular website, paid $66.4 million for a stake in Tudou Holdings Ltd to boost its investments in online video services.
Sina acquired 1.075 million American depositary receipts (ADR) at Shanghai-based Tudou's initial public offering (IPO) in the United States this month for $31.2 million, it said in a filing to the US Securities and Exchange Commission on Monday. Sina spent $35.2 million for an additional 1.49 million Tudou's ADRs, after the listing, taking the total holding to 9.05 percent.
Sina is adding video, social-networking and e-commerce services to attract users in the world's biggest Internet market. The investment in Tudou, China's second-biggest video website, follows Sina's acquisition of a minority stake in the online apparel retailer Mecox Lane Ltd this year.
Tudou is open to "strategic business cooperation in multiple areas" with Sina, it said in a statement on Tuesday. Sina's investment is "financial" in nature, Tudou said.
Sina, based in Shanghai, said in May that it plans to spend $100 million to develop its micro-blogging service to attract social-networking users.
Tudou has declined about 11 percent in trading on the Nasdaq stock market since its $174 million IPO.
Tudou ADRs rose 2.5 percent to $25.73 on Monday, compared with their IPO price of $29. The company said it plans to use proceeds from its listing to acquire video content and upgrade technology, as competition with bigger rival Youku.com Inc intensifies.
Gary Wang, founder and chief executive officer of Tudou, had his stake in the video company cut to 8.6 percent from 12.7 percent following the IPO, according to Tudou's prospectus. Tudou's site offers movies, TV series and content it produces, as well as user-generated videos.
Tudou accounted for 14 percent of online video advertising revenue in China at the end of June, compared with 17 percent at the end of 2010, while Youku gained 2 percentage points to 23 percent and Sohu.com Inc's video site jumped to 13 percent from 7.9 percent, according to data from Analysys International, an Internet information company.
An unidentified source told China Daily that Web portal Sohu.com and Internet conglomerate Tencent Holdings Ltd had approached Tudou with the intention of buying a stake but failed to reach a deal.
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