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Alibaba-Led Deal Causes Youku to Soar

NEW YORK (TheStreet) Shares of Youku Todou (YOKO) were surging Monday as the Chinese Internet television company said it signed a deal with Internet conglomerate Alibaba and Yunfeng Capital allowing both Alibaba and Yunfend to invest $1.22 billion in Youku.

Pursuant to the agreement, both Alibaba, which is set to go public perhaps as soon as this week, and Yunfeng, will invest $1.22 billion in Youkou, buying 707 million newly-issued shares, and 13.87 million Class A shares, at a purchase price of $1.6944 per newly issued share. That represents a value of $30.50 per American Depository Share, which represents 18 Class A Shares.

Shares of Youku were jumping 11% to $26.90 in pre-market trading.

"We are very pleased to have Alibaba as our strategic investor," Victor Koo, Chairman and Chief Executive Officer of Youku Tudou, said in the press release. "Alibaba's investment will strengthen Youku Tudou as China's largest online video platform and further differentiate our services and user experience. It will help us continue to build an immersive cultural entertainment platform that integrates online and offline entertainment."

"We are excited to cooperate and work closely with Victor and his team to support their innovation in this key emerging space as well as accelerate our digital entertainment and video content strategy," Alibaba Executive Chairman Jack Ma said in the release. "This is an important strategic initiative that will further extend the Alibaba ecosystem and bring new products and services to Alibaba's customers."

Following the investment, Alibaba and Yunfeng Capital will indirectly hold approximately 16.5% and 2.0%, respectively, of Youkou. Jonathan Lu, Alibaba's CEO, will Youku Tudou's board of directors upon completion of the transaction.

--Written by Chris Ciaccia in New York

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