Baidu Inc., China’s largest search engine, said Friday that they had received a non-binding acquisition bid for their $2.8 billion USD bid video streaming business iQiyi led by Baidu Chairman and CEO Robin Yanhong Li and iQiyi CEO Yu Gong.
The executives offered to acquire Baidu’s entire 80.5 percent stake in the company, formerly known as Qiyi, fueling speculation that the company is being ripened for IPO.
In May 2014 CEO Yu Gong told Bloomberg that the company planned to IPO within the next three years, giving them a loose deadline of mid-2017. The latest centralization of ownership within the Baidu family could be the first sign that the process is underway.
“The buyers expect that Qiyi will remain a strategic partner of Baidu after the consummation of the transaction and enter into business cooperation agreements with Baidu,” said Baidu in a release on Friday.
Over the past year Baidu has invested heavily in original content as they seek to outrun their main competitor Youku Tudou — the Alibaba-back streaming site. Both Alibaba and Tencent have expanded aggressively into media and entertainment, seeking to serve the growing demand for local content.
“iQiyi now plans to invest 50% of its resources in creating more self-produced content to compliment the acquired licensed content, such as films from Lions Gate.” said Baidu CEO Robin Li during their Q3 earnings call in October 2015.
Baidu said their board has formed a special committee of three independent directors to evaluate the transaction along with legal counsel.