Youku.com and Tudou Holdings, China’s top two online video companies are joining forces in an all-stock deal worth over $1 billion, a news report said.
This could create an industry leader with more than a one third share of a market that is losing money as it battles rising costs, the Reuters news report said.
The two firms are listed in the US and have been bitter rivals, locking horns in courtroom battles over alleged copyright infringement and unfair competitive practices, the report added.
Both companies have this month reported a net loss for last year, pinched by rising costs for internet bandwidth, content and mobile video services.
“This creates China's biggest video site, but it doesn't create a YouTube– they still have less than 50 percent market share,” Bill Bishop, an independent analyst based in Beijing, told Reuters.
According to the report, the merger will save the new firm $50 million-$60 million per year over the next 18 months, although it will maintain two separate platforms, which cater to different audiences, executives from the two companies said.