Alibaba was reported to have acquired Sina: "The godfather is about to become the biological father"

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Sina

Chinese e-commerce giant Alibaba (NYSE:BABA) is looking to acquire Sina.com (NASDAQ:SINA), one of China's four largest portals.

A person close to Alibaba's investment department revealed to The Paper (www.thepaper.cn) that Alibaba is negotiating with Sina on the acquisition.

On November 4, Sina and Alibaba declined to comment on the news.

Alibaba currently holds a 32% stake in Weibo (NASDAQ: WB), which was spun off from Sina. Sina and Alibaba are the first and second largest shareholders of Weibo respectively.

An employee of a local Sina website revealed that the content he has been working on in the past few months is all related to Alibaba's business. For example, it will help Alibaba's "smart city" strategy to expand local government resources. Alibaba's "smart city" channels are Taobao, Alipay and Sina Weibo. Citizens can use these apps to query and handle government services such as medical care, social security, traffic violation fines, household registration, and entry and exit.

"This year, Alibaba and Tencent have been competing for the 'smart city', and Alibaba is relying more on the resources of Sina Weibo." The insider said that although Weibo was spun off from Sina, the businesses of the two parties still overlap, and the things he is working on are both for Sina and Weibo. After the work is done, Alibaba will give Sina a commission.

Previously, there were several reports that Alibaba planned to acquire a stake in Sina Sports. The truth came out on September 8, when Ali Sports Group was established, with Alibaba holding the majority stake and Sina and Alibaba Chairman Jack Ma's Yunfeng Fund investing in it.

After Alibaba became a shareholder of Sina Weibo, users clearly felt that there were more and more Taobao ads embedded in Weibo. Ge Jingdong, vice president of Sina.com, publicly stated that Sina would rematch its own user data with the corresponding consumer behavior data in Alibaba's data, analyze consumers from a more complete perspective, and provide services for marketers.

SeekingAlpha, an American investment and financial website, analyzed that Alibaba is likely to adopt a strategy similar to its acquisition of Youku Tudou and acquire the Chinese social network Sina Weibo or even its parent company Sina. The website boldly predicted that the time would be within six months.

The reason why Alibaba needs Sina is that among the three major Internet giants in China, Tencent and Baidu have already occupied a place in the news content field (Tencent News, Baidu News). However, Alibaba still has no presence in this field. Back then, Alibaba acquired Yahoo China, a comprehensive news portal, but after several business transformations and repeated "troubles", Yahoo China has withdrawn from the stage of history.

Content can bring traffic to Alibaba's e-commerce. In the field of news content, Alibaba or its affiliates and funds have invested in Wasu Media, technology blog Huxiu.com, Guangguang Media, China Business Network, Wujie News, and Cover Media.

As of November 4, the market value of Sina Weibo was US$3.5 billion and that of Sina was US$3 billion, both of which were far lower than Youku Tudou's US$5 billion. Alibaba's third-quarter financial report disclosed that Alibaba Group held US$21.4 billion in cash. In this way, the acquisition of Sina Weibo does not pose a financial challenge to Alibaba.

Sina is one of the early news portals in China's PC Internet, but in the era of mobile Internet, Sina's competitiveness has shown signs of decline. Third-party data shows that the coverage rate of Sina News Client on smartphones lags behind some portal rivals and non-portal aggregation clients.

According to analysts quoted by Streetinsider, a US financial information website, Alibaba's acquisition of Sina may take time because Sina's equity structure is dispersed and Alibaba may need to pay a higher premium. Alibaba has cash to acquire Sina, but the transaction is more likely to be a combination of stock and cash.

Recently, there are online news that Sina has completely stopped recruiting outside the company and started business integration and optimization. The industry associates this with the rumors that Sina is being sold to Alibaba, and suspects that Sina's move is to control costs and sell at a good price.

In response, Sina Chairman and CEO Cao Guowei asked on Weibo: "Various media outlets are reporting that Sina has completely stopped recruiting from outside the company. How come I haven't heard about it?"

However, Cao Guowei did not respond to the "selling himself to Alibaba" issue.

"Welcome the godfather to become the biological father." Another Sina employee told The Paper.

When rumors of Alibaba's acquisition of Sina were rife, Sina's share price rose by nearly 9% on November 3rd, US time, the largest intraday gain since October 16th, and reached a four-month high.