Alibaba in huge Internet deal

Alibaba Group is to buy out mobile browser firm UCWeb in a bid to strengthen its presence in the mobile Internet sector, in the biggest merger in Chinese Internet history.

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

The deal will be done mainly by using Alibaba stock with a smaller part in cash, Alibaba said yesterday.

While it didn't reveal the size of the transaction, it will be the largest acquisition deal in China's Internet sector after Baidu took over 91 Wireless for US$1.9 billion last year.

Alibaba's investments in UCWeb in 2011 and 2013 gave it a 66 percent stake in the company.

Alibaba and UCWeb will form the UCWeb Mobile Business Group responsible for Internet browsers, search services, location-based services, the mobile gaming platform, mobile application distribution and mobile literature services, UCWeb said in a statement.

In a letter to company staff yesterday, Alibaba Chairman Jack Ma said the merger deal was agreed because both Alibaba and UCWeb believe information technology is being replaced by the age of "data technology."

In April, Alibaba agreed to buy a 16.5 percent stake in online video streaming and sharing website Youku Tudou Inc to bring more synergies with its online shopping business.

Alibaba is the world's largest online and mobile commerce company. It had a gross merchandise volume of US$248 billion in 2013 on its three major trading platforms, according to Xinhua news agency.

In addition to the online retail and wholesale business, it provides cloud computing services, and is the world's largest payment processor with a payment volume of US$519 billion last year.

This year, China is expected to have 560 million third party mobile browser users, according to Analysys International.

"Alibaba has a huge e-commerce business, which means it has to expand into other sectors to maintain a high growth pace, and UCWeb's mobile search and gaming businesses can bring steady revenue for Alibaba in the future," said Gong Wenxiang, an independent e-commerce commentator and market watcher.