14 DAY TRIAL // The Chinese Internet giant Alibaba has finally made an acquisition after several months of speculation and hints in this direction. The group announced that its online commerce arm Alibaba.com had purchased HiChina, an Internet infrastructure services provider with a large user base in the country. The company will buy a controlling stake in an all cash transaction valued at $79 million, which will be paid in two phases. HiChina's owners can get $15 million of those only if they hit several performance markers.
"When we went public, we set on a course to seek investment opportunities to grow our customer base and acquire additional technology and new applications to achieve our vision. HiChina is a strategic fit with that vision. With the support of the seasoned and highly capable executive team at HiChina, I am confident that our complementary businesses will create synergy and expedite our transformation from 'Meet at Alibaba' to 'Work at Alibaba'," David Wei, CEO of Alibaba.com, said.
Alibaba.com will use HiChina's technology to offer Internet solutions to small businesses. HiChina provides several related services including domain name services, web and server hosting services, email hosting services and website design and development services. The idea is that Alibaba customers wanting to open up an online store will be able to use HiChina's products as part of a larger package from Alibaba's platform for small businesses.
The market is becoming increasingly attractive for the Internet giant and it has made several moves to secure a better foothold. The company enjoys a great entry as its main business, Alibaba.com, is directed specifically at small businesses buying and selling goods through the online marketplace set up. The acquisition also means a possible boost in the company's user base for the business services as the majority of HiChina's 200,000 customers don't overlap with Alibaba's. Yahoo has a 44 percent stake in Alibaba Group, which owns Alibaba.com though it has recently sold its small direct stake in Alibaba.com.