Rumor: Alibaba in Talks to Acquire PPTV
Tencent Tech, 6/03/13
According to a number of Chinese-language tech blogs, e-commerce conglomerate Alibaba Group has entered into discussions to acquire Chinese P2P streaming video platform PPLive (PPTV) as the latter's negotiations with internet firm Sohu (Nasdaq: SOHU) have stalled. Alibaba has reportedly proposed to purchase a controlling stake in PPTV through acquisition of PPTV shares from Softbank. Alibaba has previously approached multiple streaming video platforms about possible investments or acquisitions, according to industry sources.
Zhang Hongping, Managing Director of Alibaba Capital Partners, declined to comment on the acquisition talks, saying only that video streaming is an important component of Internet development.
Recent rumors of financial problems within PPTV have been confirmed by industry executives and investors. An insider with knowledge of the talks stated that the company has only enough cash on hand to last until July of this year.
Various industry sources have reported that PPTV is preparing to release RMB 100 mln in bonds to relieve its financial pressure, with investors currently in the process of evaluating these bonds.
Beginning in 2012, PPTV has received RMB 200 mln in financing from China Merchants Bank, Bank of Communications, Shanghai Pudong Development Bank, Industrial and Commercial Bank of China, and Bank of China, according to industry sources.
Most of these loans were made out to PPTV founder Yao Xin, said a source with knowledge of PPTV's investors. PPTV has also previously partnered with a number of financial institutions to release investment trusts based on PPTV copyrighted products, in order to raise cash.
A source with knowledge of the Sohu-PPTV talks said that the latter's industry valuation has fallen from USD 700 mln to USD 450 mln.
Editor's Note: For more information on this topic, please see "Sohu Denies Rumors of Selling Sogou to Purchase PPTV," MD 5/15/13 and "Rumor: Suning, Silver Lake to Buy PPTV Stake from Softbank," MD 3/28/13 issues.
Keywords: Zhang Hongping debt financing Yao Xin Internet valuation PPLive Sohu Alibaba Group M&A online video
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