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China's Baidu receives offer to buy its 80.5% Qiyi stake
[NEW YORK] Baidu Inc, the Chinese Internet search company, said it received an offer from its chief executive officer and the CEO of Qiyi.com Inc, to buy all of its outstanding shares of Qiyi.
Robin Yanhong Li, Baidu chairman and CEO, and Yu Gong of Qiyi offered to buy the 80.5 per cent stake in the video streaming website, which has an enterprise value of US$2.8 billion, according to a statementfrom Baidu Friday.
In 2012, Beijing-based Baidu bought Providence Equity Partners' holdings in the subscription video service, which gave the Chinese search giant a "substantial majority stake." Qiyi has been building out its video content akin to Netflix Inc, working on both unique produced shows as well as distribution agreements with US providers such as Paramount Pictures.
In the second quarter of 2015, Baidu for the first time revealed how much impact Qiyi has on the company. The video service contributed to a 5.1 percentage point adjusted operating margin drag. During the third quarter, Qiyi also reported a loss, reducing Baidu's adjusted operating margins by 5.4 percentage points.
The buyers expect Qiyi to remain a strategic partner of Baidu after the transaction and Baidu has formed a special committee to evaluate the transaction, Baidu said.