Chinese e-commerce giant Alibaba and a private equity fund backed by its founder Jack Ma will pay $1.22 billion for a stake in China's leading online video platform Youku Tudou, the companies said Monday.
The move comes before a huge US share offer by Alibaba, and as the company diversifies beyond its traditional online shopping business through a string of acquisitions.
Alibaba will hold a 16.5 percent stake in New York-listed Youku Tudou while private equity firm Yunfeng Capital -- co-founded by Ma -- will have 2.0 percent, making Alibaba a strategic investor, according to a joint statement.
Ma, who stepped down as Alibaba's chief executive officer last year but remains as chairman, said the deal would allow Alibaba to accelerate a strategy for offering digital entertainment and video content.
"This is an important strategic initiative that will further extend the Alibaba ecosystem and bring new products and services to Alibaba's customers," he said in the statement.
Earlier this month, another company backed by Ma announced it would pay $531 million for a 20.62 percent stake in a domestic software developer for the financial industry, Hundsun Technologies.
In March, Alibaba made another foray into entertainment with the purchase of a majority stake in Hong Kong-listed ChinaVision Media Group.
Alibaba is planning an initial public offering in the United States, the company said in March.
It operates China's most popular online shopping platform, Taobao, which features hundreds of millions of product listings.