China's internet search engine giant Baidu Inc is in talks to sell its controlling stake in iQIYI Inc (IQ.O), China's answer to Netflix, in a deal that could value all of iQIYI at about $7 billion, two people with knowledge of the matter said.
Baidu, which owns 53% of iQIYI and holds more than 90% of its shareholder voting rights, plans to sell all its holdings in the Chinese video streaming services firm, the two people and another two sources familiar with the matter said.
While cinemas have struggled with COVID-19 lockdowns, China's online video market is booming. Domestic consulting firm Zhiyan forecasts that 2022 revenue is set to climb to 163 billion yuan ($24 billion), up 17% year on year.
Nasdaq-listed iQIYI, the No. 2 player in China's video streaming market after Tencent Holdings' (0700.HK) Tencent Video, has a market value of $4 billion. Baidu's targeted valuation of $7 billion for the whole company in its divestment would represent a price of about $8.13 per share compared with its latest close of $4.67.
The divestment plan, not previously disclosed by Baidu, comes after the firm deemed iQIYI to be a non-core asset, and as it seeks to sharpen its focus on developing its capital-intensive artificial intelligence and autonomous driving units, the first two sources said. read more
Terms of the deal have not yet been finalised and are subject to change, said the sources, who declined to be identified due to confidentiality constraints.
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