Alibaba to buy out UCWeb in China's biggest internet merger

Wed Jun 11, 2014 6:44am EDT
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By Paul Carsten

BEIJING (Reuters) - Alibaba Group Holding Ltd [IPO-ALIB.N] will fully acquire mobile browser firm UCWeb in the biggest merger in Chinese internet history, upping the stakes in its battle with arch-rivals Tencent and Baidu.

Alibaba's purchase of the one-third of UCWeb it didn't already hold emphasises the company's push to do more business on mobile in the world's biggest smartphone market, where it is locking horns with Tencent Holdings Ltd and Baidu Inc.

It also adds to a string of acquisitions, including a 50 percent stake in China's most successful football club. Once the deal closes, Alibaba, founded by Jack Ma, will have forked out almost $6 billion since the start of the year.

"Jack Ma has to do everything and anything he can to expand his footprint in the mobile space," said Michael Clendenin, managing director of Shanghai-based RedTech Advisors.

Alibaba and its affiliates' acquisitions since the beginning of 2013 total at least $9.9 billion, according to Reuters calculations. Baidu spent more than $2.4 billion on acquisitions in the same period, while Tencent shelled out more than $1.9 billion.

But Tencent, China's biggest listed internet firm, dominates smartphone screens with its near-ubiquitous mobile messaging app WeChat, a situation which Alibaba executives have referred to as a monopoly.

Baidu, the third of China's internet giants, controls one of the major gateways to the Internet with a 60 percent search market share in May, according to Alibaba-owned data firm CNZZ.

"UCWeb's not a magic bullet for them," said Clendenin. "But Jack Ma's willing to go out and invest in smaller assets that can defend against WeChat."   Continued...

A woman stands next to a door inside the headquarters of Alibaba in Hangzhou, Zhejiang province, April 23, 2014.  REUTERS/Chance Chan