For 15 billion yuan, Li Yanhong bought YY

Wen| investment community

On February 25, Baidu announced the acquisition of YY Live Broadcast, a subsidiary of Huanju Group, with a transaction amount of approximately US$2.1 billion (approximately RMB 15.2 billion).

This acquisition, which lasted for four years and experienced twists and turns, finally settled. The transaction amount shrank from the initial US$3.6 billion to US$1.5 billion.& ldquo; After bargaining for the acquisition, Baidu announced that it would invest more than 11 billion yuan in AI.

It is worth noting that just one day before the acquisition, M & A Queen Liu Xiaodan joined Baidu’s board of directors. With too much money, people come, which may add a different color to the AI competition of big factories.

An outdated merger? After 4 years, Baidu won YY

Let’s first look at the details of the transaction.

The Hong Kong Stock Exchange announcement shows that Baidu and Huanju Group have reached an acquisition agreement. Baidu has paid approximately US$2.1 billion (approximately RMB 15.2 billion) to acquire Huanju Group’s domestic video entertainment live broadcast business, namely YY Live Broadcast.

Huanju Group said that the company had previously received approximately US$1.86 billion in February 2021, and that day, the company received another approximately US$240 million in cash consideration.

YY live broadcasts are no strangers to the Internet community. In 2005, Li Xueling, former content director of NetEase, established Huaduo Technology, the predecessor of Huanju Group, in Guangzhou. Lei Jun invested the first amount of money.

In 2008, Li Xueling launched YY Voice, an instant messaging software for game communication. In just two years, more than 5 million people were online at the same time. Around 2011, YY Live Broadcast was launched, and Huanju Group became the first company in China to carry out game live broadcast business. Huanju Group was successfully listed on NASDAQ in the United States.

Time comes in November 2020. Baidu announced that it has signed a final binding agreement with Huanju Group to wholly acquire YY Live Broadcast. The acquisition includes but is not limited to YY mobile applications, YY.com website, YY PC client, etc. The total transaction amount is approximately US$3.6 billion (approximately RMB 23.699 billion). The transaction is expected to be completed in the first half of 2021. YY Live Broadcast’s products, technology, team, anchors and guild ecology will all belong to Baidu.

Regarding this acquisition of more than 10 billion yuan, Baidu CEO Robin Li once said at the earnings call that Baidu has 300 million daily users, and the acquisition of YY is very natural for traffic realization. As a large-scale live broadcast platform, YY has accumulated rich experience. Baidu Live has many places to learn from and learn from.

Surprisingly, three days after the acquisition news was announced, Muddy Waters, a well-known short seller, raised doubts that YY Live Broadcast was suspected of fraud in terms of revenue, profits, paid users and other data.

Short-selling in Muddy Waters did not affect the continuation of mergers and acquisitions. In February 2021, Huanju Group issued an announcement stating that the transaction of selling YY Live Broadcast to Baidu had been basically completed. In March of the same year, Baidu also stated in an announcement that the acquisition had been basically completed and some usual matters were expected to be completed in the near future.

However, on January 1, 2024, three years after the agreement was signed, Baidu announced that it would terminate the acquisition agreement.

The reason given by Baidu is that the share purchase agreement stipulates that the delivery of the acquisition must meet certain preconditions, including obtaining necessary government regulatory approvals, and that if the acquisition is not completed before the final deadline, either the buyer or the seller has the right to terminate the agreement.

Now, after four years of twists and turns, both parties may take a step back, and the transaction amount has been reduced from US$3.6 billion to US$2.1 billion. Baidu has finally won the YY live broadcast business.

Baidu invited the M & A Queen

Coincidentally, at almost the same time, Baidu announced on the Hong Kong Stock Exchange that it had appointed Liu Xiaodan to succeed Brent Callinicos as the new independent director and chairman of the audit committee of the board of directors.

Everyone knows Liu Xiaodan in mergers and acquisitions. Graduated from Peking University, Liu Xiaodan has a brilliant investment banking career of nearly 20 years. She was once the soul of Huatai United and handled many classic cases, giving rise to the title of the queen of mergers and acquisitions. In 2019, Liu Xiaodan and his former subordinates jointly established Chenyi Fund to focus on mergers and acquisitions.

In January 2021, Chenyi Investment announced that it had completed the fundraising of its first RMB M & A fund, with a total scale of 6.8 billion yuan, focusing on three major fields: medical and health, consumption and services, and technology and manufacturing.

From 2020 to now, Chenyi has invested in many projects such as Hualan Biotech, BYD Semiconductor, China Innovation Airlines, Xinde Semiconductor, Changjing Technology, Lisui Technology, Ruichen Pet Medicine, Haizheng Animal Insurance, and Stamm. In addition, Chenyi Foundation also cooperated with Mindray Medical to establish a medical industry fund and cooperated with WuXi AppTec to establish a medical M & A fund.

In March last year, Zhang Yong, former CEO of Alibaba, joined Chenyi Fund and co-served as managing partner with founder Liu Xiaodan. The powerful and powerful immortal combination temporarily shook the venture capital circle.

This time, Baidu invited Yanhong Li’s Peking University alumni, which may be sending a positive signal.

On the other hand, just after the completion of the M & A transaction between Baidu and Huanju Group, the US$1.6 billion (equivalent to more than 11 billion yuan) previously deposited in the escrow account has been fully refunded to Baidu. Baidu said it plans to invest the funds in cloud computing and AI infrastructure construction.

This also means that there are more bullets for Baidu AI.

Recently, Robin Li emphasized at the Dubai AI Summit that despite technological progress and cost reductions, investment in chips, data centers and cloud infrastructure still needs to be invested, and more computing power needs to be used to try different paths.

This is also a reflection of domestic manufacturers ‘efforts to invest in AI. The exploding DeepSeek is like a butterfly flapping its wings, setting off a new round of competition in the technology industry.

Not long ago, Alibaba Group CEO Wu Yongming announced that Alibaba will invest more than 380 billion yuan in building cloud and AI hardware infrastructure in the next three years, totaling more than the total in the past ten years.

Coincidentally, Liang Rupo, CEO of ByteDance, recently said at a staff meeting that the focus of this year’s ByteDance business is on pursuing intelligent ceilings, not the performance of a specific product.

A new round of AI competition for large factories is kicking off.