Biggest-ever Chinese internet takeover: Baidu shells out $1.9B for app distributor 91 Wireless

The Chinese search giant Baidu(s bidu) has been looking to diversify its business, and it seems to be achieving this goal in style – the company is about to pull off a record-breaking takeover, paying $1.9 billion for the Android(s goog) app distribution outfit 91 Wireless.
More than half of the cash, $1.09 billion, will go to 91 Wireless’s majority stakeholder, online gaming firm NetDragon, with the rest going to other minority stakeholders. It’s the most anyone has ever paid for a company in the Chinese internet market, but it will give Baidu the strong foothold in mobile that it needs if it is to fend off strengthening local rivals such as Tencent, Alibaba and Qihoo 360.
A couple of months ago, Baidu also muscled its way into the Chinese streaming video space by announcing a plan to buy PPS for $370 million.
91 Wireless, which NetDragon had until now been lining up for a spinoff and flotation, has a variety of products and services including community websites, but its focus is on smartphones. According to iResearch’s figures, 91 Wireless has the largest third-party app distribution platform in China. The outfit also offers e-reader software and launch screens for handsets.
The takeover is confirmation, if any was needed, that there’s a vast amount of mileage in third-party app distribution platforms, particularly in countries such as China where official (Western) app stores are often limited. Google Play is available in China, but it doesn’t carry paid apps there – indeed, when it comes to China, Amazon(s amzn)’s Android app distribution platform is more functional in that sense than Google’s.
(Incidentally, you know that massive Android security flaw that probably doesn’t affect those who download their apps from Google Play? Markets like this are a major reason why such flaws remain a big deal — there are many legitimate reasons for using third-party app stores.)
There are around 750 million active mobile internet users in China, and half of the smartphones there run Android, so it’s not hard to see why Baidu saw such value in 91 Wireless.