Chinese eCommerce giant Alibaba Group Holding Ltd. has acquired Youku Tudou, Inc., China’s version of YouTube, for around $3.9 billion.

Alibaba already owned shares in the company prior to acquisition, with The Wall Street Journal reporting that the deal priced the company at $4.4 billion.

Under the deal Alibaba will pay $27.60 an American depository share, a 35.1 percent premium over the closing price of Youku Tudou’s stock on October 15, and a 13 percent premium to Youku Tudou’s trading price on Thursday.

Founded in 2012 via a merger of rival sites Youku and Tudou and listed on the New York Stock Exchange, Youku Tudou allows users to search, view and share high-quality video content across multiple devices.

The company’s online video content varies from user-generated content and self-produced serials, to licensed professional content from legacy media firms; like YouTube the platform is said to offer a space for individuals and institutions to upload and share their treasured moments, independent films, viral videos, and other creations.

Youku Tudou saw some 286 million unique visitors in August and competes with Tencent Video, 163 Video, and Sohu Video in the Chinese market.

“We believe this combination with Alibaba maximizes value for Youku Tudou shareholders and significantly benefits our customers, users and team,” Youku Tudou Chairman and Chief Executive Officer Victor Koo said in a statement.

“We are eager to work with Alibaba to grow our multi-screen entertainment and media ecosystem. We are confident that we will strengthen our market position, and further accelerate our growth through the integration of our advertising and consumer businesses with Alibaba’s platform and Alipay services.”

Big buy

The acquisition by Alibaba may be pocket change for the company, but it’s a big buy when it comes to the video streaming market, in particular in developing markets, although calling China that may be somewhat inaccurate in 2015.

Sadly Youku Tudou has never once booked a profit since listing on the NYSE, but with Alibaba’s might behind it (think Amazon combined with eBay combined with PayPal and a pile of other sites), it may thrive with the support it will now receive.

Prior to going public, Youku Tudou had raised $40 million from investors including Maverick Capital, Brookside Capital (an affiliate of Bain Capital), Sutter Hill Ventures, Farallon Capital, and China-based Chengwei Ventures.

It’s not clear from reports when the acquisition will close, but the deal has been endorsed by Youku Tudou’s board.

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