As one of the oldest Internet companies in China, search giant Baidu is expanding its streaming video ecosystem in battle against emerging star ByteDance.
Baidu announced on Tuesday that it will acquire the domestic video-based entertainment live streaming business of JOYY in China.
The deal includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6 billion in cash.
The closing of the transaction is expected to occur in the first half of 2021.
Robin Li, Co-Founder and CEO of Baidu, said the transaction will catapult Baidu into a leading platform for live streaming and diversify the company's revenue source.
YY Live is expected to benefit from Baidu's large traffic and thriving mobile ecosystem, while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as an enviable creator network that will further strengthen Baidu's massive content provider network, Li added.
Together with the team from YY Live, Baidu hopes to explore the next-generation livestreaming and video-based social media that can expand beyond entertainment into the diversified verticals on Baidu platform, he said.
Baidu owns the largest search engine in China, but its advertising revenue has being falling year-on-year over the last several quarters.
To counter that slowdown, Baidu is expanding its ecosystem beyond its core search engine.
The company launched an app called Haokan to chase ByteDance's Douyin in the short video market.
Haokan had 110 million DAUs in late 2019, but it's still dwarfed by Douyin's 600 million DAUs in China. Therefore, it has been widely rumored Baidu will buy smaller streaming video players, like YY, to complement Haokan's growth.
Additionaly, according to an IFR report on Monday, JOYY is considering a potential secondary listing in Hong Kong next year.
Baidu shares went down 1% while YY was up 6% in after-hours trading session after the announcement.