The Chinese internet search engine Baidu, through its subsidiary Baidu Holdings, has signed a binding memorandum of understanding (MoU) to acquire the entire issued share capital of 91 Wireless Websoft for $1.9bn, to improve its presence in mobile internet market.
Under the MoU, Baidu and NetDragon will further negotiate and agree on the relevant terms of the proposed acquisition in the definitive agreements by 14 August 2013 to purchase NetDragon's 57.41% equity interest in 91 Wireless.
NetDragon, which holds about 80.57 million shares in 91 Wireless (or 54 per cent stake), said that the sale of stake in 91 Wireless will enhance its earnings and capital base.
Baidu will acquire the remaining stake of 91 Wireless from other shareholders based on the same terms and conditions offered to NetDragon, subject to their willingness to sale by 14 August 2013.
Elinor Leung, an analyst with CLSA in Hong Kong, told Reuters: “It’s good for Baidu because if you look at mobile, currently apps are more popular than mobile sites because Internet download speeds are slow. So with the acquisition of this appstore, Baidu can work more closely with the apps developer and be able to enhance further their search capabilities.”
NetDragon also said it will scrap the proposed spin-off and listing of 91 Wireless on Hong Kong Stock Exchanges’ secondary Growth Enterprise Market if the sale is completed.
Established in 2007, 91 Wireless is engaged in the development and operation of smartphone apps 91 Assistant and HiMarket in China.