The ship is strong against the wind and waves, and we are united to keep warm. On the night of March 12, Youku announced that it would acquire Tudou in a full stock exchange. Tudou’s American depositary receipts (Tudou ADS) will be delisted and exchanged for 1.595 shares of Youku. American depositary receipts. According to rough estimates, the transaction volume reached US$1.04 billion, setting the largest stock exchange merger and acquisition case in China's Internet market. The two parties named the new company after the merger "Youku Tudou Co., Ltd.", and Youku's American depositary receipts will continue to trade on the New York Stock Exchange under the code "YOKU". This may be a merger and acquisition to keep warm. With both parties lacking funds, the merger will help enhance the competitiveness of both parties in the video field. Affected by this news, Tudou's opening price reached $42.32, an increase of 174.98% from last Friday's closing price of $15.39. Previously, Tudou's share price had begun to fluctuate violently. Starting from March 6, Tudou has risen for four consecutive trading days, with an increase of 30%. In contrast to the sudden decline in the previous few days, it has turned a big corner. Transactions and mergers and acquisitions are a very mature financial industry in the United States, and founders can continue to create new creations. Industry insiders also believe that the merger is reasonable. Following the trend, the "beautiful" merger and acquisition case After the merger, Youku Tudou's purchasing power and flexibility will be enhanced, which will make the entire industry more rational. In addition, after the merger of the two companies, the two websites will still operate separately on the front end, and the integration will only be on the backend; both companies will be committed to maximizing profits, but there is still no timetable for profit targets. This "Youku Tudou merger" once again staged an outstanding merger and acquisition case. Youku and Tudou were merged by agreement and nominal share exchange. The day before the merger, the market values ??of Tudou and Youku were US$436 million and US$2.853 billion respectively, with a ratio of approximately 13.3%: 86.7%. According to the latest disclosed news, after the merger, Tudou owns approximately 28.5% of the new company's shares, and Youku owns 28.5% of the new company's shares. Youku gave Tudou a higher premium. The price is determined based on the income of both parties and the number of users. Among them, income is the most important criterion. This premium fairly reflects the value of both parties. Previously, the fourth quarter and full-year financial reports of Youku and Tudou in 2011 showed that Youku’s net income in 2011 reached RMB 897.6 million, an increase of 132% compared with the same period in 2010. Tudou's net revenue in fiscal year 2011 was RMB 512.2 million, an increase of 78.9% over fiscal year 2010. Previously, Tudou's intrinsic value had not been fully realized due to low transaction volume and lack of cash. After the merger, these issues will be resolved. Mergers and acquisitions are a matter of mutual consent. The two parties reaching an agreement without paying any capital can prove two points: first, both parties are short of money; second, both parties are very urgent. According to the 2011 financial report disclosed by Tudou.com, Tudou’s net loss in fiscal year 2011 was 511.2 million yuan. Moreover, 2012 is regarded as the year of consolidation in the video industry. If the top two video websites continue to fight, they may be even more desperate. From a business philosophy point of view, the merger of these two companies may be inevitable for the development of the industry. The advantages of mergers and acquisitions definitely outweigh the disadvantages. After the merger between Youku and Tudou, they will account for about half of the Chinese video market. According to Tudou's previously announced financial report, it is expected to achieve breakeven in 2012. After the merger, it will be beneficial to the scale advantage of the new company. Judging from the results after the merger, after the merger, Youku and Tudou will face a series of integration problems. The industry predicts that Youku and Tudou will launch a round of large-scale layoffs, involving company executives including CFO, as well as content procurement, sales, technology and marketing personnel. The merger of the two video websites will further reduce labor costs. The industry generally holds a positive attitude toward mergers and acquisitions. Before the merger, Youku and Tudou were under huge financial pressure. Although Youku has always maintained its No. 1 position in the video field, the huge amount of financing raised by its listing has not substantially improved its profitability. This merger is more significant than weakening competition and strengthening cooperation. It will help reduce costs for both parties, especially the cost of purchasing video copyrights, and increase video advertising prices and revenue. The revenue of both companies will double this year, and the total revenue will be close to 3 billion yuan.

Data show that in the fourth quarter of 2011, Youku ranked first in China's video market share, accounting for 21.8%, and Tudou ranked second, accounting for 13.7%. If Youku does not accelerate the amortization of operating costs, it will basically be close to the profit margin. There is a high degree of overlap in procurement between Youku and Tudou. After the merger of the two companies, the procurement cost can be saved by almost half. Previously, the two companies had lowered each other's prices in advertising competition. This phenomenon can now be alleviated. In line with the annual increase in advertising, the new company's advertising prices have at least 10%-15% room for improvement. This time, the merger of Youku and Tudou will also mean that the competition among video websites has entered a new round of high-dimensional competition. At present, there are "more monks and less rice", and homogeneous competition is still a serious phenomenon in the video industry. The acquisition of Tudou may be just the first in the video field in 2012, and there will be more mergers and acquisitions in the industry.