China-based Baidu, Inc. (HK:9888) announced yesterday that its $3.6 billion agreement to acquire JOYY, Inc.’s (NASDAQ:YY) YY Live has hit a regulatory roadblock. Three years after its initial announcement, the deal has lapsed as regulatory approval for the transaction was not obtained by the December 31, 2023, deadline. JOYY is one of the leading Chinese social live-streaming platforms, with a global monthly active user base of 277 million.
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The stock is trading down by over 1% today at the time of writing.
Baidu is a Chinese technology company that operates an internet search engine in the country. The company also provides AI (artificial intelligence) and other internet-related services.
A Blow to Ambitious Plans
The company, which was targeting the deal through its affiliate Moon SPV, has ended the share purchase agreement with JOYY, failing to meet the required conditions for approval. The deal was first announced in November 2020.
This setback came as a blow to the company’s efforts to expand its content offerings in the digital video segment and enhance revenue diversification beyond advertising. However, this strategy has become a little outdated, with the tech industry’s focus shifting towards generative AIover the past year. Baidu has been recognized as a regional leader in this evolving landscape.
Furthermore, experts had already anticipated the deal being scrapped, as the Chinese antitrust regulator was unlikely to provide approval. This hesitancy was linked to Beijing’s determination to enhance control over companies collecting significant consumer data, coupled with long-standing efforts to combat gaming addiction.
Is Baidu Stock a Buy?
According to TipRanks, 9888 stock has received a Strong Buy consensus rating, backed by Buy recommendations from all five analysts who gave reviews over the past three months. The Baidu share price forecast is HK$184, which implies an upside of 58.5% on the current trading level.
