SINA Corp. (SINA) has inked an agreement on a strategic alliance between several entities affiliated with SINA, including PRC units of Weibo Corp., and several entities affiliated with Alibaba Group, including Taobao (China) Software Co., Ltd. and Zhejiang Tmall.com Technology Co., Ltd., to jointly explore social commerce as well as develop innovative marketing solutions to enable merchants on Alibaba e-commerce platforms to better connect and build relationships with Weibo users.
Both the companies would cooperate in the areas of user account connectivity, data exchange, online payment and online marketing, and would explore new business models for social commerce based on the interactions of the hundreds of millions of users on Weibo and on Alibaba's e-commerce platforms. The alliance may generate nearly $380 million in advertising and social commerce services revenues in aggregate for Weibo over the next 3 years.
Separately, the company announced that Alibaba, through an unit, has invested $586 million to purchase preferred and ordinary shares representing about 18% of Weibo on a fully-diluted basis. Also, SINA has granted an option to Alibaba to enable Alibaba to increase its ownership in Weibo to 30% on a fully-diluted basis at a mutually agreed valuation within a certain period of time in the future.
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