After more than three years, Baidu's related party Moon terminated its equity acquisition agreement with YY Live.
On January 1st, Baidu announced on the Hong Kong Stock Exchange that its affiliated company Moon SPV Limited had terminated the Share Purchase Agreement entered into on November 16, 2020, between Moon SPV Limited, Baidu, Huanju Group, and other related parties through the exercise of contractual rights, as amended or supplemented in the future. This means that the acquisition of up to $3.6 billion (approximately RMB 25.6 billion) has been terminated.
Baidu affiliate Moon terminates YY acquisition agreement
On the evening of January 1, 2024, Baidu announced on the Hong Kong Stock Exchange that its related party 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 on YY's domestic video entertainment live streaming business on November 16, 2020, and agreed that if the transaction delivery was not completed before the deadline, either party had the right to terminate the agreement. As of December 31, 2023, which is the final deadline of the agreement, all the delivery prerequisites stipulated in the share purchase agreement have not been met.
Next, Moon will seek to negotiate with Huanju on the future arrangements of the transaction after terminating the equity acquisition agreement and explore reasonable solutions. Analysts believe that this announcement is a normal action upon the expiration of the agreement date between both parties and will not affect the normal operation of YY Live.
On November 17, 2020, Baidu announced the signing of a share acquisition agreement with Huanju. According to the agreement, Baidu will acquire Huanju's domestic video entertainment live streaming business for $3.6 billion in cash, including but not limited to YY mobile application, YY.com website, and YY PC. At that time, the acquisition was considered the largest acquisition in Baidu's history. After the delivery is completed, the YY client will be retained, and the content and technology will be provided to Baidu simultaneously. The domestic live streaming team will also be transferred to Baidu accordingly.
It is worth mentioning that on February 8, 2021, Huanju announced that the sale of its YY live streaming business to Baidu had been basically completed. However, it is understood that the transaction has not actually obtained necessary government regulatory approvals and other conditions, and is in an unfinished delivery state.
Gathering was once shorted by muddy water
YY Live is a domestic entertainment live streaming platform that includes music, technology, outdoor, sports, games, and other content. The monthly active users on the mobile end exceed 41 million, and the signed star rated anchors exceed 1.5 million.
The incubation of internet celebrities is an important force for the diversification of YY's live streaming traffic and content. In recent years, YY Live has incubated over hundreds of anchors, of which over 23% have become internet celebrities with millions of followers across the network, establishing a matrix of internet celebrities with high traffic and high monetization ability.
However, after Baidu announced its acquisition of Huanju in 2020, Huanju encountered a well-known short selling agency that claimed that 90% of the revenue from Huanju's live streaming business was fake.
At that time, Muddy Waters released a 71 page investigation report questioning Huanju, stating that there were suspicions of fraud in Huanju's revenue, profits, paid users, and other data. Affected by this, the gathering fell by over 20% at one point. At that time, whether Baidu had conducted a detailed due diligence on YY Live and whether to continue acquiring YY Live became a hot topic of discussion in the industry.
The announcement released by Huanju later showed that the relevant audit committee, legal auditors, and data analysis expert team have conducted a comprehensive review of the allegations related to YY's live streaming business. The conclusion drawn from the review is that the allegations and conclusions regarding YY's live streaming business in the Muddy Waters Report have not been substantiated.
The performance report for the third quarter ending September 30, 2023 released by Huanju at the end of November 2023 showed that Huanju achieved a revenue of 567.1 million US dollars in the third quarter of last year, a decrease of 3.35% compared to the same period last year; The net profit attributable to the parent company was 72.89 million US dollars, a year-on-year decrease of 85.85%.
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