Alibaba takes giant strides

E-commerce firm steps up buying spree ahead of US listing with UCWeb deal

Alibaba Group Holding Ltd said on June 11 that it will buy all the remaining shares of mobile browser company UCWeb Inc in China's biggest Internet deal, as the Hangzhou-based e-commerce giant is seen stepping up its spending spree before its much awaited initial public offering in the United States.

The deal, the latest among Alibaba's series of investments totaling $4.8 billion over the past six months, marks the company's further push into the mobile Internet sector.

Alibaba Group and UCWeb said in a joint statement that they have decided to set up the UCWeb Mobile Business Group to deal with businesses like Internet browsers, search services, location-based services, mobile gaming platforms, mobile application distribution and mobile literature services.

Yu Yongfu, chairman and chief executive officer of UCWeb, will head the new business group and be part of Alibaba Group's strategy committee, the top strategy-making team of the e-commerce giant, the statement said.

"The integration will create the biggest merger in the history of China's Internet," Alibaba said on its official micro blog. Alibaba already holds a 66 percent stake in UCWeb, according to its filing to the US Securities and Exchange Commission last month.

Yu of UCWeb said in an interview in Beijing on June 11 that the deal will mainly be done using Alibaba's stock with a smaller part as cash.

"Since Alibaba hasn't been listed in the US yet, there are no specific numbers on the investment. But the deal is estimated to be more than twice that of Baidu's $1.9 billion acquisition of app store 91 Wireless last year."

Yu said he does not think UCWeb is being taken over by Alibaba. "Very few of the investments made by China's big three Internet giants Baidu, Alibaba and Tencent were through stock offerings. It is clear that Jack Ma and Alibaba have treated UCWeb as partners by offering us shares," said Yu, adding that both UCWeb and Alibaba share the same dream in the mobile Internet.

The UCWeb Mobile Business Group will integrate UCWeb's 3,000 employees into Alibaba and will be Alibaba's third business group after the e-commerce Business Group and Cloud Computing & Big Data Business Group.

Yu said Alibaba has sufficient talent and has achieved enough in e-commerce. But in terms of developing non-e-commerce areas, Alibaba still lacks a "pivot", which can ensure sustainable traffic growth despite making several investments. "Adding UCWeb's strengths in browser, app distribution and mobile search can certainly give Alibaba a strong push in the mobile Internet sector."

UCWeb, which was founded 10 years ago, has more than 500 million users globally for its browser business. It also has a leading mobile gaming distribution platform named Jiuyou and a mobile search service called Shenma.

Lu Jingyu, an analyst on the mobile Internet market with iResearch Consulting, said that by taking full control of UCWeb, Alibaba is expected to enrich its portfolio of mobile offerings.

"Although Alibaba has made a lot of effort in the mobile space, such as launching Mobile Taobao and Alipay Wallet, there are still many gaps that the group needs to bridge to create a comprehensive ecosystem in the mobile Internet world," Lu said.

UCWeb's strengths in browser, app distribution and mobile search can effectively boost Alibaba's presence in mobile Internet technologies, she said. But the investment can hardly bring any direct influence to Tencent Holding Ltd's popular mobile messaging app WeChat, which has more than 500 million users, Lu said.

mengjing@chinadaily.com.cn

(China Daily Africa Weekly 06/13/2014 page23)