HONG KONG/BEIJING (Reuters) – Alibaba Group Holding Ltd and Tencent Holdings Ltd have each held separate talks with Baidu Inc to acquire a controlling stake in video streaming service iQIYI Inc, people with knowledge of the matter told Reuters.
But the discussions have stalled with little hope of recommencing soon as they balk at a valuation of around $20 billion demanded by Baidu and as both companies, which have their own video streaming services, face heightened scrutiny by China’s antitrust regulators, two people said.
Another Chinese tech giant, TikTok owner ByteDance has also internally looked at the possibility of acquiring a controlling stake in iQIYI, three sources said.
Considered China’s equivalent to Netflix Inc, Nasdaq-listed iQIYI has a market capitalisation of $16.4 billion, which values Baidu’s 56.2% stake at about $9.2 billion.
Tencent, whose interest in iQIYI was first reported by Reuters in June, believes the company is worth about half of what Baidu wants, said two of the people.