The rumors from last week are correct: Chinese online video service Ku6.com has been purchased by Shanda's wireless subsidiary Hurray! Holding Company Ltd.
"This is a defining moment for Ku6," said Li Shanyou, CEO of Ku6. "We are excited to join forces with Hurray. I am confident that with Hurray's wireless complementary content, music distribution platforms and large music user base, Ku6 can bring together the most exciting digital content and build the leading integrated mobile and video entertainment platform in China."
In the all stock transaction, all of the outstanding capital shares of Ku6 will be sold to Hurray and all of the outstanding employee stock options of Ku6 will be cancelled, in exchange for an aggregate of 723,684,204 Hurray ordinary shares, of which 44,438,100 will be represented by American Depositary Shares of Hurray, each representing 100 ordinary shares of Hurray. After the completion of the merger, Ku6 will retain its brand name and become a wholly-owned subsidiary of Hurray.
Completion of the share purchase will be subject to the condition that the shareholders of Hurray approve the issuance of ordinary shares of Hurray to the shareholders and option holders of Ku6 at a special shareholders meeting to be convened in the near future. The board of directors of Hurray has unanimously recommended this transaction. The transaction is expected to close in the first quarter of 2010.
Certain executive officers and selling shareholders of Ku6 intend to enter into lock-up agreements for a period of 180 days to two years after closing with respect to the Hurray shares that they will receive in the merger.