Chinese internet giant Baidu reportedly entered talks on selling a majority stake in iQIYI, a deal which could value the video streaming platform at about $7 billion and help fund the company’s development of emerging technologies.
Reuters reported Baidu plans to sell all its holdings in the platform. The internet group owns 53 per cent of iQIYI and more than 90 per cent of its shareholder voting rights.
Potential buyers are said to include China Mobile, which owns streaming service Migu Video, and Hong Kong-based private equity firm PAG. Baidu reportedly tapped Bank of America to work on a potential deal.
iQIYI sent a statement to Reuters describing the reports as “purely market rumour”.
The news agency noted while iQIYI produced several hit drama series over the years, it has struggled for profitability during its 12-year history.
Revenue from the platform fell 9 per cent year-on-year to CNY1.2 billion ($178.7 million) in Q1, with the average daily number of subscribing members dropping from 105 million to 101 million.
Reuters noted iQIYI posted a profit in Q1 for the first time since 2016, when it started to report quarterly earnings.
In a statement on the recent results, iQIYI CEO and founder Yu Gong noted the platform had improved its operating efficiency, “leading to margin expansion and profits”.
Baidu is said to have deemed iQIYI a non-core asset as it shifts focus to developing AI and autonomous vehicle technologies.Subscribe to our daily newsletter Back