Orlando, FL 3/12/12 (StreetBeat) -- Two Chinese online video companies agreed to merge Monday in an all-stock deal that will create a major new player in the rapidly growing market.
Under the terms of the deal, Tudou Holdings Ltd. (Nasdaq: TUDO) shareholders will receive 7.2 Class A shares for each Tudou share. Investors who own U.S.-listed shares of Tudou will be offered 1.6 shares of Youku Inc. (NYSE: YOKU), according to a joint statement.
The combined company will be called Youku Tudou Inc., which Youku CEO Victor Koo says will become "one of the largest Internet properties in China."
Tudou's American Depository Shares, which trade on the Nasdaq, surged 156% in early trading. Youku's U.S. shares jumped 24% on the New York Stock Exchange.
The YouTube of China is more than just cat videos
Often referred to as the YouTube of China, Youku is China's leading Internet television company. Tudou was founded in 2005 as the first user-generated content video sharing website in China.
The news also boosted shares of other Chinese Internet companies.
Shares of Renren (NYSE: RENN), a social networking site known as the Facebook of China, rose 8% in early trading.
SINA Corp., (Nasdaq: SINA) the parent company of Weibo -- China's version of Twitter -- also gained. Shares were up 4%.
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