Alibaba pushes into social networking with Weibo investment

By Sayantani Ghosh

(Reuters) - Chinese e-commerce firm Alibaba Group, which has been trying to break into the social networking market, has acquired an 18 percent stake in web portal Sina Corp's microblogging service Weibo for about $586 million.

Sina has also granted Alibaba the option to increase its stake in Weibo to 30 percent within a stipulated time, which it did not specify.

Sina's U.S.-listed shares jumped 18 percent to $59.38 in early trading on Monday.

The deal, which values Weibo at over $3 billion, will provide more advertising revenue to Weibo as Sina tries to monetize the service and increase its lead over rival Tencent Holdings' social messaging product, WeChat.

Weibo, China's version of Twitter, has grown at a fast clip since its launch in 2009 and has gained from the blockage of Twitter by the Chinese government.

More than 500 million Chinese use Weibo to opine on everything from Korean soap operas to China's latest political intrigue.

The alliance is expected to generate about $380 million in advertising and social commerce services revenue for Weibo over the next three years, Sina said in a statement.

The deal should drive more web traffic to Alibaba's Taobao Marketplace, China's largest e-commerce website with a consumer focus.

Alibaba's business model is based on online advertising and subscription fees.

Unlisted Alibaba, controlled by Chinese internet entrepreneur Jack Ma, also runs Alibaba.com, the country's largest business-to-business commerce platform, and Alipay, an online payment platform.

Ma, one of China's best known corporate leaders, reckoned to be worth $3.4 billion by Forbes late last year, built his e-commerce empire from scratch.

He plans to step down as CEO on May 10 and become executive chairman. Alibaba is likely to list its shares in Hong Kong late this year or early next year, according to industry sources.

Alibaba has kept mum about its IPO plans, but its listing could be a windfall for Yahoo Inc, which owns nearly a quarter of the company.

Alibaba and Weibo will work on user account connectivity, data exchange, online payments and online marketing, Sina said in a statement.

(Reporting by Supantha Mukherjee and Sayantani Ghosh in Bangalore; Editing by Saumyadeb Chakrabarty)

Source: http://news.yahoo.com/sina-says-alibaba-buys-18-percent-stake-weibo-121859682.html

tesla model s tesla model s Black Ops 2 Secede ben roethlisberger Diwali elmo