Alibaba buys UCWeb to compete on mobile search
The deal comes ahead of the Alibaba's IPO and may have a price tag higher than Baidu's $1.9 billion acquisition of mobile app store 91 Wireless.
Alibaba, one of China's largest e-commerce portals, has purchased the remaining shares of UCWeb in a cash-and-stock deal, a spokesperson from UCWeb has confirmed with CNET.
UCWeb happens to be China's most popular mobile web browser, and the buyout is Alibaba's bid to challenge mobile search rivals in China. Alibaba's purchase comes as the company ramps up its business ahead of its impending IPO, rumored to be set for August 8.
According to the press release, the UCWeb purchase is higher than Baidu's $1.9 billion acquisition of mobile app store 91 Wireless but the actual amount was not disclosed.
The purchase isn't a complete surprise -- Alibaba has been increasing its stake in UCWeb -- and contradicts earlier claims made by UCWeb CEO Yu YongFu, who had said his company would remain independent. As early as 2012, UCWeb Chief Financial Officer Roy Rong had discussed the company's plans for an IPO, but that was before accounting scandals in China shifted UCWeb executives away from the plan.
Back in 2009, Alibaba became the largest shareholder in UCWeb when the browser company sold an untold number of shares to the e-commerce company -- a relationship that was said to be kindled when Alibaba partnered with UCWeb to make payments through UCWeb's browser. Alibaba purchased a larger stake in UCWeb in 2013, followed by Aliobaba CEO Jack Ma joining UCWeb's board of directors. Together, the investments amounted to a 66 percent stake in UCWeb.
In April, Alibaba and UCWeb developed a joint venture to tackle Baidu and Qihoo in China's search market via the mobile search engine, Shenme (sm.com).
As part of the acquisition, UCWeb and Alibaba will form the Alibaba UC Mobile Business Group.
Despite growing opportunities, mobile search has been one area in which Alibaba hasn't excelled. Baidu is currently the leader in mobile search in China, though Maxim Group analyst Echo He says the market is "still wide open."
"There is no clear market dominant player yet," he said. "This prompts many companies to spend in the hope of taking a material market share."
By acquiring the remaining shares in UCWeb, Alibaba has snagged not only 20 percent of China's mobile search market, but also UCWeb's mobile browser and gaming businesses -- a clear threat to Baidu, Tencent, and Qihoo.