Baidu (NASDAQ:BIDU) has acquired PPS, an Internet video provider, for $370 million.

The deal is expected to close during the second quarter of 2013. Once completed, Baidu will consolidate the PPS online video business into Baidu's financial statements. Baidu will also merge the PPS video library with iQiyi, Baidu's video platform. PPS will operate as a sub-brand of iQiyi. Combined, the merger will make Baidu China's largest online video provider by number of mobile users and total viewing time. 

iQiyi CEO Gong Yu said the consolidation will generate "significant synergies" and provide for an "improved user experience as well as more and better content." Moreover, it should provide greater value for marketers, who will gain a wider range of options for advertisers. The acquisition will help iQiyi become better.

PPS founder and Chairman Zhang Hongyu said:

As a leading Chinese online video brand with an eight year history, PPS has the opportunity to join with iQiyi in opening up future markets, and we are excited to be working together to reshape the industry. We will strive to maximize the value of our combined resources and integrated teams, and we will jointly contribute to the progress and maturation of China's video industry.

After the acquisition, Gong Yu will continue to be CEO of iQiyi. Zhang Hongyu and PPS president Xu Weifeng will serve as co-presidents at iQiyi, and will be in charge of the PPS sub-brand and new business development.

Fool contributor Kevin Chen owns shares of Baidu. The Motley Fool recommends and owns shares of Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.