Chinese internet portal Sohu.com is buying online video provider 56.com from social networking firm Renren.
Renren is selling the unit for $13m, the low price reflecting its strategy to divest itself of non-core businesses and focus on its social networking service. On the other hand, Sohu is keen to diversify from its search and web portal business.
Sohu and Renren have already signed the deal and expect it to close in about one month. Sohu’s New York-listed shares rose to a one-month high following the news, climbing 3.5% to $50.30.
Speaking at the recent Mipcom programming market in Cannes, Sohu CEO Charles Zhang said the company would invest heavily in producing original content, developing drama series in-house and also buying from independent producers in China.
China’s online video sector has seen an increase in consolidation over the past few years, with the merger of Youku and Tudou, and Baidu’s acquisition of PPStream, which is being merged with iQiyi.