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 5521U.S.: +1 347 549
4095U.K.: +44 203 713 5083Hong Kong: +852 3018 6768China: 400 624
0406 or 800 870 0531Conference 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:
- Taobao Marketplace (www.taobao.com),
China’s largest online shopping destination
- Tmall.com (www.tmall.com), China’s
largest third-party platform for brands and retailers
- Juhuasuan (www.juhuasuan.com), China’s
most popular online group buying marketplace
- Alitrip (www.alitrip.com), a leading
online travel booking platform
- AliExpress (www.aliexpress.com), a
global online marketplace for consumers to buy directly from
China
- Alibaba.com (www.alibaba.com), China’s
largest global online wholesale platform for small businesses
- 1688.com (www.1688.com), a leading
online wholesale marketplace in China
- Alibaba Cloud Computing
(www.aliyun.com), a provider of cloud computing services to
businesses and entrepreneurs
Safe Harbor Statements
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “potential,” “continue,” “ongoing,”
“targets” and similar statements. Among other things, statements
that are not historical facts, including statements about Alibaba’s
beliefs and expectations, the business outlook and quotations from
management in this announcement, as well as Alibaba’s strategic and
operational plans, are or contain forward-looking statements.
Alibaba may also make written or oral forward-looking statements in
its periodic reports to the U.S. Securities and Exchange Commission
(the “SEC”), in press releases and other written materials and in
oral statements made by its officers, directors or employees to
third parties. Forward-looking statements involve inherent risks
and uncertainties. A number of factors could cause actual results
to differ materially from those contained in any forward-looking
statement, including but not limited to the following: Alibaba’s
goals and strategies; Alibaba’s future business development;
Alibaba’s ability to maintain the trusted status of its ecosystem,
reputation and brand; Alibaba’s ability to retain or increase
engagement of buyers, sellers and other participants in its
ecosystem and enable new offerings; Alibaba’s ability to
successfully monetize traffic on its mobile platform; risks
associated with limitation or restriction of services provided by
Alipay; risks associated with increased investments in Alibaba’s
business and new business initiatives; risks associated with
acquisitions; changes in laws, regulations and regulatory
environment that affect Alibaba’s business operations; privacy and
regulatory concerns; competition; security breaches; the continued
growth of the e-commerce market in China and globally; and
fluctuations in general economic and business conditions in China
and globally and assumptions underlying or related to any of the
foregoing. Further information regarding these and other risks is
included in Alibaba’s filings with the SEC. All information
provided in this earnings release is as of the date of this
earnings release and are based on assumptions that we believe to be
reasonable as of this date, and Alibaba does not undertake any
obligation to update any forward-looking statement, except as
required under applicable law.
Proposal
The proposal sent to the board of directors of Youku is set
forth below:
October 16, 2015
The Board of DirectorsYouku Tudou Inc.7/F,
Tower B, World Trade CenterNo. 36 North Third Ring Road, Dongcheng
DistrictBeijing 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.
- Purchase
Price. We propose to acquire all of the outstanding Class A
and Class B ordinary shares of the Company and ADSs not already
owned by us, at a purchase price equal to US$26.60 per ADS (or
equivalent amount per Class A and Class B ordinary share, as the
case may be), in cash, based on the Company’s share capital set
forth in the Company’s public filings.
- Funding.
We intend to fund 100% of the consideration payable in the
Acquisition with our cash on hand. Accordingly, our proposal would
not be subject to any uncertainty or delay relating to any
third-party financing.
- Support
Agreement. We, through our affiliate Alibaba Investment
Limited, have entered into a support agreement with Victor Wing
Cheung Koo, 1Verge Holdings Ltd., 1Look Holdings Ltd., The Koo 2012
Irrevocable Children’s Trust, Chengwei Partners, L.P., Chengwei
Evergreen Capital, L.P. and Chengwei Ventures Evergreen Advisors
Fund, LLC (collectively, the “Supporting
Parties”), pursuant to which the Supporting Parties, solely
and only in such Supporting Party’s capacity as beneficial owner of
its shares of the Company, have agreed to vote all of the Class A
and Class B ordinary shares of the Company and ADSs beneficially
owned by them, respectively, in favor of the Acquisition and
against any other transaction in competition or inconsistent with
the Acquisition. Based on the Company’s public filings, we and the
Supporting Parties, collectively, own approximately 36.9% of the
issued and outstanding shares of the Company representing
approximately 59.3% of the total voting power thereof.
- Due
Diligence. We are in a position to rapidly commence our due
diligence immediately upon receiving access to the relevant
materials.
- Definitive
Agreements. We have engaged Simpson Thacher &
Bartlett as our international legal counsel and Morgan Stanley Asia
Limited as our financial advisor and are prepared to promptly
negotiate and finalize mutually satisfactory definitive agreements
with respect to the Acquisition (the “Definitive Agreements”). The Definitive Agreements
will provide for representations, warranties, covenants and
conditions that are customary and appropriate for transactions of
this type. We expect that the Definitive Agreements will be
completed in parallel with our due diligence.
- Process.
We believe that the Acquisition will provide superior value to the
Company’s shareholders. However, we recognize that the Board will
evaluate the Acquisition independently before it can make its
determination to endorse this proposal. We expect that the Board
will form an independent committee to evaluate our proposal, and
Alibaba’s and the Supporting Parties’ representatives on the Board
will recuse themselves from any deliberations with respect to the
Acquisition. We note that Alibaba has a right of first offer with
respect to a change of control transaction involving the Company,
including any merger or sale of the Company. In the course of
considering the Acquisition, you should be aware that Alibaba is
interested only in pursuing the Acquisition and that Alibaba does
not intend to sell its stake in the Company to any third
party.
- Public
Disclosure. To comply with United States securities laws
requirements, we will be required to disclose the nature of this
proposal, as well as a copy of this letter, in an amendment to our
existing Schedule 13D to be filed with the Securities and Exchange
Commission.
- Confidentiality. We trust you will agree with us
that it is in our mutual interests to ensure that the parties
proceed in a strictly confidential manner, except as otherwise
required by law, until the execution of the Definitive Agreements
or termination of our discussions in connection with the
Acquisition.
- No Binding
Commitment. This letter constitutes only a preliminary
indication of the key terms of our proposal, and does not
constitute any binding commitment with respect to the Acquisition.
Any such commitment will be contained only in the Definitive
Agreements and on the terms provided therein.
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.
Sincerely,
ALIBABA
GROUP HOLDING LIMITED By: /s/ Joseph C. Tsai
Name:
Joseph C. Tsai
Title:
Executive Vice Chairman
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version on businesswire.com: http://www.businesswire.com/news/home/20151016005244/en/
Alibaba GroupInvestor Relations ContactJane C.
Pennerinvestor@alibabagroup.comorMedia ContactRobert
Christie917-860-9410bob.christie@alibaba-inc.com
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