Tudou’s US IPO Still in the Works

SHANGHAI, April 21 (Reuters) – Chinese online video website Tudou Holdings is still planning to go public in the United States and is on schedule for its listing, a company spokeswoman told Reuters, after rumors circulated in the market that the company could be up for sale to a rival.

The company’s backers include Temasek Holdings, IDG Technology Venture Investment, Granite Global Ventures, General Catalyst Partners, Jafco Asia, KTB Ventures and JAIC.

Tudou filed for an initial public offering in November last year, seeking to raise up to $120 million to purchase content. However, its IPO plans were stalled and its rival Youku.com Inc managed to beat it to the market, soaring in its market debut. Youku’s stock is now trading at five times its IPO price.

Rumours have surfaced on industry websites in the past day that Tudou was looking to be acquired by another firm such as Youku, raising the question of whether Tudou was still proceeding with its IPO.

A Tudou spokeswoman told Reuters on Thursday that Tudou’s IPO was still on the cards and was going according to schedule, but declined to comment on whether Tudou was seeking to be acquired.

Youku also declined to comment.

China’s online video industry is highly competitive and saturated with many players jostling for content licensing rights. Other than Youku, Tudou competes with Ku6, PPTV, PPStream and Baidu-backed Qiyi.com.

Analysts said Tudou’s coming onto the market more slowly could have given Youku an unassailable advantage.

“Look at the difference in stock price for Ku6 and Youku. Most U.S. investors are only interested in investing into the number one player, so if you are number two or three and late to market, it will be much harder for you,” said Helena Yu, a Shanghai-based analyst with Pacific Epoch.

In the fourth quarter, Youku had 23.7 percent of the Chinese online video market by revenue, with Tudou next in line at 18.1 percent.

China, the world’s largest Internet market by users, saw its online video market grow 260 percent to 717 million yuan ($110 million) in the fourth quarter of 2010, according to data from Beijing-based research firm Analysys International.

For the fourth quarter, Youku reported a net loss of $5.7 million.

“The companies are all fighting for content right now and trying to gain as much market share as possible. Many of them aren’t too concerned with profitability,” Yu said.

($1 = 6.526 yuan) (By Melanie Lee; editing by Jason Subler)