Baidu to buy Chinese app store for $1.9 billion
Baidu, China's top search engine, plans to acquire app store 91 Wireless for $1.9 billion to strengthen its foothold in the country's highly competitive mobile computing sector.
Baidu will buy a 57.4 percent stake in 91 Wireless, one of China's earliest appstores, from NetDragon Websoft Inc for $1.09 billion, and the remainder from other shareholders, both companies said on Tuesday.
"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," said Elinor Leung, an analyst with CLSA in Hong Kong.
China's mobile Internet market is expected to double to about 300 billion yuan ($48 billion) in 2014 from 150 billion yuan in 2012, with the number of active mobile Internet users rising to 749 million from 521 million during the same period, according to research firm Analysys International.
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NetDragon's shares lost as much as a fifth of their value on Tuesday and were down 18 percent at HK$19.74 at 0305 GMT. 91 Wireless will be spun off and listed on Hong Kong's secondary Growth Enterprise Market, NetDragon said in a statement on the Hong Kong stock exchange.