Deal would allow firms to monetize user flows
China's Internet giant Alibaba Group Holding plans to acquire Sina Corp, the leading domestic Internet media company, media reports said late Wednesday.
The companies are negotiating the terms of the acquisition, Shanghai-based news portal thepaper.cn reported, citing a person close to Alibaba's investment department.
Neither company would comment when contacted by the Global Times on Thursday.
Separately, a rumor circulated widely this week saying that Sina had suspended recruitment of experienced staff to allow it to integrate and optimize its businesses, news portal huanqiu.com reported Tuesday. That rumor was denied on Wednesday by Sina CEO Cao Guowei, who wrote on his twitter-like Sina Weibo account that he had heard nothing of any such action.
However, the two companies have a history of cooperation. Alibaba set up the Alibaba Sports Group together with Sina in September, with the goal of reshaping China's sports industry through the Internet, the Xinhua News Agency reported in September. The joint company is majority owned by Alibaba.
Also, Alibaba invested $586 million for a stake of 18 percent in Sina's Weibo microblogging service in April 2013.
Sina Weibo has added e-commerce features to its platform recently, with direct links to Taobao and Tmall, two of Alibaba's main online shopping platforms.
"Alibaba's online shopping platforms will acquire more users if a merger is achieved, considering that Sina has a solid user base," Yu Ming, the chairman of ZC, a Beijing-based Internet communication group, told the Global Times on Thursday. "This may be the biggest driving force for Alibaba behind this merger."
As for Sina, Yu noted that the company could attract more advertisers and increase its sales if shoppers could directly go to Taobao or Tmall by simply clicking on advertisements on Sina's pages.
Chen Wei, a senior consultant at the Beijing-based investment consultancy ChinaVenture Investment Consulting Group, agreed with Yu.
"The two companies can monetize their user flows in this way," said Chen.
Alibaba and its associated companies have invested massively in the media sector. In June, Alibaba spent 1.2 billion yuan ($189.12 million) to purchase a 36.74 percent stake in Shanghai China Business News Media Co, media reports said.
Media reports also said an investment subsidiary of Alibaba put 6.53 billion yuan into Shenzhen-listed Wasu Media Holding Co in April 2014.
Meanwhile, Alibaba's domestic rivals, Tencent Holdings and Baidu Inc, have stepped into the news field. Tencent has a news page on its website and Baidu launched its news platform Baidu News in November 2003.
Yu told the Global Times that Sina needs a large, strong partner due to its continuous business decline. "As China's Internet giant, Alibaba is certainly a good choice," Yu added.
Sina's app had 23.2 million active users as of August, ranking sixth among the news apps of China's main news web portals, according to a report released by Beijing-based consultancy Analysys in October.
Tencent had 94.87 million active users and Sohu had 70.33 million, the report said.
Chen also noted that capital support from Alibaba could ease Sina's plight as it continued to lose users.
