Baidu, Inc. (NASDAQ: BIDU), the largest search service in China, today announced that it has signed a Memorandum of Understanding (“MOU”) on the Proposed Acquisition of all equity interests in 91 Wireless Websoft Limited (“91 Wireless”) from NetDragon (HKEx:777).
Pursuant to the MOU, Baidu will purchase the entire issued share capital of 91 Wireless for a total of US$1.9 billion. Baidu and NetDragon will further negotiate and agree on the relevant terms of the Proposed Acquisition in the definitive agreements by 14 August 2013 (“the Long Stop Date”) to purchase NetDragon’s 57.41% equity interest in 91 Wireless.
Before the signing of definitive agreements or the Long Stop Date (whichever is earlier), NetDragon is restricted from approaching or discussing with any third parties the sale of 91 Wireless. Baidu intends to purchase the remaining equity interests in 91 Wireless from other shareholders based on terms and conditions similar to those offered to NetDragon, provided those shareholders are willing to sell by the Long Stop Date.
91 is one of the largest iOS and Android app distributors in China. Downloads from 91 platforms, including 91 Assistant and HiMarket, exceeded 10 billion and daily downloads reached 15 million in Q1 2013.
91′s two major revenue sources are mobile games and advertising. The rest is from paid apps including 91 Launcher. It expected to make six to eight million yuan in net revenue in 2013. The management of NetDragon estimated the margin could be 75%-80% for the full year 2013.
NetDragon acquired 91, as an iPhone software managing tool, in 2008. HiMarket and Hiapk, an Android app store and Android-related news site, respectively, were later launched in 2011 for expansion to Android market.