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iQiyi Denies Rumors of Merger with Youku Tudou

DoNews, 5/15/15

Gong Yu, CEO of Chinese internet firm Baidu's (Nasdaq: BIDU) online video subsidiary iQiyi, denied rumors that Baidu, internet firm Tencent (0700.HK), and online video site operator Youku Tudou (NYSE: YOKU) were in negotiations concerning a possible merger, by stating that there was no truth to the rumor and that neither iQiyi nor its stockholders have been in communication with Youku Tudou.

According to the rumor, Baidu expressed a hope in arranging a merger between iQiyi and Youku Tudou several months ago. Baidu would trade iQiyi for the equivalent value of stock in Youku Tudou, and Baidu would follow up with an additional investment. The rumor recently evolved to include Tencent in the merger talks. One possible case would be a merger between Tencent Video, iQiyi and Youku Tudou, but because of the number of companies involved, the feasibility was too low. Another rumored case would be a merger between Tencent Video and Youku Tudou, with Tencent trading its video division for the same value in stock and following up with additional investment. After which, Youku Tudou management would be responsible for the operation of the new company.

Editor's Note: In April 2014, Chinese e-commerce conglomerate Alibaba Group (NYSE: BABA) took an 18.5% stake in Youku Tudou. For more background, please see "Alibaba Takes 18.5% Stake in Youku Tudou," MD 4/28/14 issue.

Keywords: Gong Yu Internet online video Youku Tudou Baidu Tencent 0700.HK BIDU YOKU iQiyi M&A

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