On the first day of the new year, Baidu affiliates and Huanju Group announced the termination of their three-year acquisition plan.
On the evening of January 1, 2024, Baidu announced on the Hong Kong Stock Exchange that its related party Moon SPV Limited (hereinafter referred to as Moon) had terminated the Share Purchase Agreement entered into by Moon, Baidu, Huanju Group and other related parties in accordance with the previously signed agreement, which was later revised or supplemented.
In November 2020, Baidu announced the signing of a share purchase agreement with Huanju Group. According to the agreement, Baidu will acquire the domestic video entertainment live streaming business of Huanju (i.e. YY Live) for approximately $3.6 billion in cash (adjusted according to the agreement or consideration, equivalent to RMB 25.7 billion at the current exchange rate), including but not limited to YY mobile applications, YY.com website, and YY PC.
Affected by this, on the evening of January 2nd Beijing time, Huanju US stocks opened low and rose low. As of the time of writing, they fell 16%, with a share price of $33.346 and a total market value of $2.027 billion.

Termination of $3.6 billion acquisition
On the evening of January 1, 2024, the Hong Kong Stock Exchange announced that Baidu affiliate Moon had terminated its equity acquisition agreement with YY Live in accordance with the previously signed agreement.
According to the announcement, Moon signed an equity acquisition agreement with Huanju Group on November 16, 2020, regarding YY's domestic video entertainment live streaming business. The share purchase agreement stipulates that the delivery of the proposed acquisition must meet certain prerequisites, including obtaining necessary government regulatory approvals and other conditions, and if the proposed acquisition is not delivered before the final deadline, both the buyer and seller have the right to terminate the share purchase agreement. As of December 31, 2023, which is the final deadline, all the delivery prerequisites stipulated in the share purchase agreement have not been fully met.
Baidu stated that Moon will seek to discuss with Huanju Group the next steps after terminating the purchase agreement.
On the same day, Huanju Group announced that it had received a written notice from a Baidu affiliated company to terminate the agreement. And it was stated that the sale of YY live streaming to Baidu was basically completed on February 8, 2021, but there are still some tasks to be completed in the future. After receiving notice from Baidu to terminate the acquisition, Huanju Group is seeking legal advice and will consider all possibilities in response to Baidu's notice. The company explicitly reserves all rights.
In its 2022 annual report, Baidu mentioned the acquisition, stating that the completion of the acquisition was subject to several conditions, including obtaining necessary regulatory approvals from government agencies. If the delivery is not completed by the latest delivery date, the share purchase agreement may be terminated, and the company and JOYY have agreed to extend the latest delivery date indefinitely until such extension is terminated by either party.
In addition, Baidu stated in its annual report that after considering adjusting its operating capital of $100 million, the company has paid a total of $1.9 billion to JOYY and its designated custody accounts in accordance with the terms and schedule stipulated in the share purchase agreement, and deposited a total of $1.6 billion into multiple custody accounts.
According to reports from Jiupai Finance and others, the termination of the acquisition was due to the lack of approval from relevant regulatory authorities.
On January 2nd, an insider confirmed to a reporter from the Daily Economic News that the termination of this acquisition was indeed due to regulatory reasons. According to its disclosure, in the past two years, Baidu has been carrying out proxy management (YY Live) and other work in order to maintain business stability. In the decision-making process, both parties hope to ultimately achieve their goals and have made efforts to achieve them. However, the acquisition was terminated due to the failure to meet the delivery conditions, just like buying a house without obtaining a property certificate.
Previously, Baidu and YY's live streaming business had already begun to merge. According to reports at the time, in November 2020, Baidu made an internal organizational adjustment, and then Baidu Vice President Cao Xiaodong was responsible for the pan entertainment live streaming, pan knowledge, and other businesses. This means that both Baidu's live streaming platform and the upcoming YY live streaming business will be under the responsibility of Cao Xiaodong.
At the end of 2021, Cao Xiaodong resigned from Baidu.
Disappointed Live Show Pet
YY live streaming is a representative of traditional runway live streaming that has been left behind after the battle of the "Thousand Broadcast Battle". When short video platforms such as Tiktok and Kwai have not yet emerged, and live broadcast forms such as live broadcast with goods and games have not yet emerged, YY live broadcast is the absolute head of the track.
From the perspective of stock price performance, in January 2018, the stock price of Huanju Group, which was behind YY Live, once exceeded $140 (non reinstatement). At that time, live streaming on the runway was in the "golden age".
In November 2020, Huanju Group and Baidu announced the acquisition agreement mentioned earlier.
However, shortly after the announcement of the aforementioned transaction, Huanju Group encountered short selling by well-known short selling firm Muddy Waters Research, claiming that 90% of Huanju Group's live streaming business revenue was fraudulent. In response to the short selling in muddy waters, Huanju Group stated at the time that there were a large number of errors in the report.
But in recent years, the live streaming industry has been accelerating, and live streaming sales have seen explosive growth. Game live streaming has also emerged, and the focus of traditional runway live streaming has been constantly dispersed. YY live streaming has begun to decline.
By comparison, from 2018 to 2020, YY Live's net revenue was 10.273 billion yuan, 10.963 billion yuan, and 9.95 billion yuan, respectively; The net profits were 3.289 billion yuan, 3.701 billion yuan, and 3.141 billion yuan, respectively. In 2020, YY Live's net revenue and net profit had already shown a significant decline.
Since 2020, reporters have not seen Baidu separately disclose the performance of YY Live.
In addition, according to the data released by QuestMobile in 2022, Tiktok and Kwai, which started from short videos, have become the main force of live broadcast e-commerce. As of February 2022, Tiktok and Kwai live broadcast users accounted for 86.8% and 86.0% respectively.
The above-mentioned insiders also believed in an interview with reporters that, based on the current situation, Baidu's termination of the transaction is in compliance with the provisions of the agreement. In addition, the uncertainty of the past two years has indeed had a certain impact on transactions. In addition, from an investment perspective, terminating the acquisition this time is not a bad thing for Baidu, but rather a measure to break even. "Baidu's overall strategy has also shifted to the big model, and in fact, it has already paid $1.9 billion before, which is the money already paid, so it must be a timely stop loss.".