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Alibaba Pays US$586 million for a 18% Stake in Weibo

Alibaba Group Holding Ltd. agreed to buy a stake of 18% in Sina Corp. (SINA)’s Weibo for $586 million, connecting China’s largest Twitter-like service with the nation’s biggest e-commerce company.

Alibaba acquired preferred and ordinary shares and has the option to increase its stake to 30 percent at “a mutually agreed valuation,” according to a statement yesterday. The companies said they will also work on user-account connectivity, data exchange, and online payment and marketing.

The number of registered users on Sina’s Weibo rose 73 percent last year to 503 million.  Sina Corp. Chief Executive Officer Charles Chao said that “e-commerce will play a vital role in building an eco-system around Weibo’s open platform.”

Sina, based in Shanghai, has boosted development spending for Weibo, which has more than 500 million users, as clients increasingly post from mobile devices rather than computers.  Alibaba, operator of the Taobao and Tmall online marketplaces, is expanding into mobile devices and cloud computing to take advantage of the increasing number of shoppers who order from smartphones and tablets.

Jack Ma said last month that the company may use acquisitions to boost growth through apps because it hasn’t been able to keep up with Tencent (700) Holding Ltd.’s WeChat messaging service. WeChat had more than 300 million users by January.  Ma is focusing on strategy after Alibaba named Jonathan Lu to replace him in May as chief executive officer, amid speculation the company is preparing for an initial public offering.

Source:  Bloomberg News

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