Alibaba offers to privatized another Chinese company listed on the NYSE

The Chinese biggest e-commerce company, Alibaba announced that it will buy the remaining 82 percent of China's YouTube-like service provider, Youku Tudou. According to a source, the company is offering Youku Tudou $26.60 per share totalling up to $3.6 billion.

According to CNN Money, Alibaba currently own 18 percent of Youku Tudou shares which was bought back in 2014 for $30.50 per share. This all-cash deal means, that if the acquisition went through, Youku Tudou values would be worth around $4.2 billion.

Based on the filing made to the New York Stock Exchange regulator, Youku Tudou will go private and be delisted from the NYSE when the deal is signed. Although the company will go private, the company said in its blog according to TechCrunch that no changes in management board will be made and Victor Koo will continue to lead the company as its chairman and chief executive officer.

Although the company has never reported a huge profit, the 500 million visitors per month on the site is what attracts Alibaba to acquire it according to Reuters. An analyst said that Alibaba is expecting to turn the company into a platform to provide online television and film for Chinese viewers. The company has also acquired one of China biggest film production company, ChinaVision Media in 2014.

According to Alibaba Chief Executive, Daniel Zhang "Digital products, especially video, are just as important as physical goods in e-commerce, Youku's high-quality video content will be a core component of Alibaba's digital product offering in the future." Currently, Youku Tudou already offers its subscriber with Western and Chinese movie however the company has not been aggressive to market it.

Previously, Netflix announced that the company will slowly expand its business to China as its subscribers in the US are saturating. However, an analyst is predicting that the company will face a hard time to introduce its service for China market. According to James Cordwell "For Netflix, I think people already thought that China was going to be a challenge."

Youku Tudou shares price closed at $24.95 per share on Friday up by 22 percent as the stock rallied higher upon the circulation of the acquisition by Alibaba. Youku Tudou board of directors had approved and agreed on the offer by Alibaba, but investors' approval is still needed.

This is not the first China company turns private due to acquisition by big investors. Previously, a Chinese security software maker Qihoo 360 Technology Co. Ltd. was acquired by Citic Securities Co. Ltd. for $10 billion.