Suning Commerce Group, China’s biggest appliance chain, has acquired a 44% stake in PPLive (known as PPTV), a large online video company in the country, becoming its largest shareholder.
The deal, announced on Monday, involves Suning pay $250 million for the stake, while Hony Capital, an investment unit of Lenovo, will hold 1.34%. Combined, the two groups will pay $420 million.
It comes aimed intense online competition among retailers and follows Suning’s acquisition of Redbaby, an online shopping mall for baby products, in September.
“The cooperation with PPTV is good practice in Suning’s internet exploration, which will help us occupy more channels to the online communities ... and gain customers,” said Sun Weimin, vice chairman of Suning.
China’s traditional appliance chains such as Suning are in urgent need of adapting their business models to survive in a multimedia era.
Valuing the rapidly increasing group of online consumers, online and offline retail chains including China’s Amazon Jingdong.com and Suning’s peer Gome have also tried to gain more market share online.
TV websites have millions of active users, which makes them attractive to the retailers.
China’s largest search engine Baidu in May acquired another video company PPS for $370 million.
After the deal, Suning will assign two directors to the board, but PPTV will remain independent in terms of staff, assets and operation.
The valuation represents a 2013 price-to-sales ratio of 4.2 times, compared to listed peers’ average of 8.5 times, the company said.
The selling shareholders include Softbank, Bluerun Ventures and Draper Fisher Jurvetson Fund.
