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Alibaba takes giant strides with UCWeb

2014-06-12 11:20 China Daily Web Editor: Qin Dexing
Jack Ma, chairman of Alibaba Group Holding Ltd, speaks at a news conference in Japan. The e-commerce giant has been on a spending spree ahead of its IPO in the United States. Provided to China Daily

Jack Ma, chairman of Alibaba Group Holding Ltd, speaks at a news conference in Japan. The e-commerce giant has been on a spending spree ahead of its IPO in the United States. Provided to China Daily

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

Alibaba Group Holding Ltd said on Wednesday 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 ahead of its highly anticipated 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 also 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 in May.

Yu of UCWeb said in an interview in Beijing on Wednesday 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," he said.

Yu said that he doesn't think that 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 that Alibaba has enough talent and achievement in terms of 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 lots of gaps that the group needs to bridge for creating a comprehensive ecosystem in the mobile Internet world," Lu said.

She added that UCWeb's strengths in browser, app distribution and mobile search can effectively boost Alibaba's presence in mobile Internet technologies. 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.

Alibaba Group Holding Ltd, China's largest e-commerce company, is expanding its US operations through an invitation-only website for retailers called 11 Main.

The site is meant for specialty shops and boutiques offering clothes and jewelry that aren't available through mass-market retailers, according to a statement on the website. The home page of the soon-to-open platform asks customers who want to shop early to request an invitation.

Alibaba has expanded its US foothold with investments in ShopRunner, Quixey Inc and Fanatics Inc as it seeks to move beyond China and compete with sites such as Amazon.com.

As it heads toward an IPO this year in New York, Alibaba set up an investment team in the US in October to work with entrepreneurs focused on Internet commerce and to help the company learn about local operations.

"The US is still a huge market - per capita spending is a lot higher than in China," said Mark Tanner, the founder of China Skinny, a Shanghai-based research and marketing agency. "The acquisitions of local companies could be part of their plan to learn."

Alibaba filed for its IPO last month, and the company has been valued at $168 billion, according to analysts. The Hangzhou-based company operates such websites as Taobao Marketplace and Tmall.com, and generated about $8 billion in revenue last year.

The new website's name is a reference to the "Main Street" shopping experience, San Mateo, California-based 11 Main Inc said in its online statement.

"We're constantly introducing new shop owners who represent the diversity of Main Street," said Mike Effle, president and general manager of 11 Main.

Abbygail Reyes, a California-based spokeswoman for 11 Main, didn't respond to e-mails or text messages seeking additional comment.

Florence Shih, a Hong Kong-based spokeswoman for Alibaba, said the company is happy to support 11 Main, but she declined to comment further.

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