Alibaba offers $3.6 billion to buy China's 'YouTube'

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Alibaba is getting serious about its video ambitions.

The online shopping giant is buying China's YouTube-like service Youku Tudou (YOKU).

Alibaba (BABA) first invested in the site in 2014, paying $30.50 per share for just over 18% of the New York-listed company.

Now it's offering $26.60 per share, or $3.6 billion, for the remaining 82%. The offer values Youku Tudou as a whole at $4.2 billion.

Youku is among the most popular video sites in China. It claims to have 580 million monthly unique visitors.

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Under the proposal, Youku's founder, Victor Koo, would continue to lead the business as chairman and chief executive officer.

"I've always admired what Victor has built," Jack Ma, Alibaba's executive chairman and founder, said in a statement.

Alibaba, which started as an e-commerce company, is trying to tap into China's fast growing market for digital media.

It has invested in, one of the biggest local music service providers, and took control of film production company ChinaVision Media last year.

"A closer partnership with Youku will give us the opportunity to support Victor and his leadership team to fulfill the dream of building the leading digital entertainment platform in China," Ma said.

Alibaba said it made the offer with the support of the main shareholders in Youku, including Koo.

Alibaba was up 1.1% in premarket trading. Youku shares were up over 23% premarket.

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