In an all-stock deal, China’s leading online video provider, Youku Inc. (NYSE: YOKU), is merging with Tudou Holdings Ltd. (NASDAQ: TUDO). Tudou shareholders will receive 7.177 shares of Yoku stock for each share of Tudou they hold. Holders of Tudou’s US ADSs — worth 4 shares of class A common stock — will receive 1.595 Youku ADSs in the exchange. One Youku ADS is equal to 18 shares of Youku class A common stock.
Youku’s market cap is about $1.93 billion, while Tudou’s is about $402 million. Youku shareholders will own approximately 71.5% of the combined entity, while Tudou’s owners will hold 28.5%.
Tudou had a miserable fourth quarter and the company’s shares fell sharply last week. Exploding costs more than cancelled out the effect of higher revenues for the company. Youku reported a net loss for 2011 this morning of $23 million, while Tudou’s loss for last year came in at $81.2 million.
The combined company will be called Youku Tudou Inc. and will continue to trade on the NYSE under the ‘YOKU’ symbol.
Youku ADSs are up about 13% in the pre-market this morning, at $28.30 in a 52-week range of $13.76-$69.95. Tudou’s ADSs have skyrocketed, up more than 190% to $29.61, a new 52-week high. The previous range is $9.50-27.91.
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