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What: Shares of Chinese online video company Tudou Holdings
So what: The all-stock deal will create China's largest video site, commanding more than one-third of the market. Rising costs and intense competition have made for a particularly tough operating environment lately, so it's no surprise that even Youku shares are up big -- about 14% -- on the news.
Now what: Upon completion of the deal, the combined company will be called Youku Todou Holdings, owned 71.5% by current Youku holders and 28.5% by current Tudou holders. "We expect to see significant synergies across a number of areas including leveraging licensed content over a larger user base and realizing efficiencies in bandwidth management and other common expenses," said Youku CEO Victor Koo, who will lead the new entity. Of course, as there are still far too many players in the Chinese online video space, the likes of Tencent Holdings, Sohu.com, and Baidu might be solid plays on even more industry consolidation.
Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Sohu.com and 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 Fool's disclosure policy always gets a perfect score.