Yesterday, Alibaba and UCWeb jointly announced the former’s full acquisition of the latter, publicly calling it the biggest merger in the history of Chinese internet companies.
Today, UCWeb founder and CEO Yu Yongfu gave an interview to foreign media to discuss his company’s role within Alibaba moving forward. While he remained vague about some of the details, here’s everything we’ve learned so far:
Really bigger than Baidu’s $1.9 billion acquisition of 91 Wireless?
Many were skeptical of this claim when it was put forward in the Chinese press release, and Yu avoided stating the exact sum of money involved in the merger. However, we do know that claim is based on UCWeb’s entire valuation, not just the remaining one-third of the shares that Alibaba didn’t already own.
Yu said that because the majority of the transaction was paid for in Alibaba stock instead of cash, the final price will be dependent on Alibaba’s valuation, which analysts estimate around US$168 billion. In fact, Yu even boasted that UCWeb could drive Alibaba’s stock value.
We can say with some confidence that UCWeb’s valuation lies somewhere south of US$3.4 billion. That’s because Alibaba is required to publicly report any acquisitions worth more than 20 percent of its assets, which now stand at around US$17 billion according to its SEC prospectus.
We’ll know for sure how much Alibaba paid when it updates the prospectus.
Where does UCWeb stand now?
UCWeb will maintain all of its branding for UC products like its mobile browser as well as the two companies’ joint project, Shenma. Mobile search engine Shenma is aiming for 200 million users by the end of this year. “In our internal deliberations, mobile search will be an important sector for innovation,” Yu said.
The company’s flagship mobile browser was last reported to have 500 million quarterly active users globally.
UCWeb’s mobile ad revenues will generate an estimated US$200 million, which are shared roughly 50-50 between the company and its partners. That number is expected to exceed US$500 million next year. The company’s gaming arm will also pull in more than US$100 million this year, and is projected to surpass US$250 million in 2015.
Yu says in three to five years, he plans to cross the one billion user mark across all the company’s products.
Once UCWeb is fully integrated into Alibaba, it will become the ‘Ali UC mobile business group,’ which will jointly lead development for browsers, mobile search, mobile gaming, mobile reading, and location-based services. It will also control PP Assistant, which UCWeb acquired in December, and will work with Alibaba’s other portfolio companies like Youku and Weibo.
Yu has famously said before that UCWeb is “not for sale,” but the CEO said today the offer came directly from Alibaba founder and executive chairman Jack Ma two months ago, and he hadn’t even considered an acquisition prior to that. Ma and Yu first met in December 2008, and shortly thereafter Alibaba invested in UCWeb. The two companies have been close ever since, and Yu says he trusts Ma. “We share the same vision and the same dream together,” Yu says.
Alibaba pumped an additional round into UCWeb last year, which brought Alibaba’s stake to 66 percent. So why wholly acquire UCWeb if Alibaba already owned a majority stake? Yu explained that the majority of UCWeb’s voting board members were from his own company, so Alibaba didn’t really have control. Also, being a separate company made it difficult to consolidate and share finances.
Yu says he’s confident in Alibaba’s impending IPO.
As for helping Alibaba spread to international markets where UCWeb has proven popular – India, Southeast Asia, Russia – Yu said the two companies “will help each other,” but didn’t give any specifics.