Baidu's $2.1bn Acquisition of YY Live
- katerinageorgiou5
- Mar 28
- 6 min read
By Holly Griffin, Ishaanika Gulzar, Kai Lim, Katerina Georgiou, Tomiwa Oshai (King's College London); Matt Jung, Karson Shi, Mateo Sy, Grace Pui, Parth Talwar (The University of Hong Kong)
Photo: Unsplash
Overview of the deal
Acquirer: Baidu, Inc.
Target: YY Live
Implied Equity Value: n/a
Total Transaction Size: $2.1 billion
Closed Date: H1 2025
Target Advisor: Not disclosed
Acquirer advisor: Not disclosed
Baidu’s acquisition of YY Live marks a significant step in its strategy to strengthen its position in China’s competitive digital entertainment and live-streaming market. The $2.1 billion deal, finalized after regulatory hurdles delayed an earlier $3.6 billion agreement in 2024, underscores Baidu’s commitment to diversifying its revenue streams and enhancing its ecosystem beyond its core search and AI businesses. Additionally, the move is set to help Baidu compete with entertainment rivals such as Douyin.
YY Live, a leading video-based live-streaming platform, brings a robust user base and advanced streaming technology to Baidu’s portfolio. This acquisition enables Baidu to integrate YY Live’s capabilities into its existing platforms, such as Baidu App and Haokan, creating synergies in user engagement, content delivery, and advertising monetization. By leveraging its AI-driven recommendation algorithms and cloud infrastructure, Baidu aims to optimize YY Live’s performance, enhance user experience, and drive revenue growth through targeted advertising and premium content offerings.
For JOYY Inc., the sale of YY Live represents a strategic shift, allowing the company to transition from a more China-focused firm to one with a more international scope. Through focusing on their global platforms such as Bigo Live, Likee, and Hago, JOYY can better innovate upon their international operations. Moreover, the sale unlocks a significant cash inflow, with $1.86 billion received in February 2021 and $240 million recently received for a total of $2.1 billion. Overall, the deal has strengthened JOYY’s financial position and provided resources for future investments in its remaining business segments.
The deal also reflects broader trends in China’s internet sector, where platforms are increasingly competing for user attention and integrating live-streaming with e-commerce and AI-driven services. By acquiring YY Live, Baidu aims to better compete with rivals like ByteDance’s Douyin and capture a larger share of the growing digital entertainment market.
“This transaction will catapult Baidu into a leading platform for live streaming and diversify our revenue source” - Baidu, Inc.
Company Details (Acquirer - Baidu)
Founded in 2000 and headquartered in Beijing, China, Baidu is a leading IT company with a strong Internet foundation. Often referred to as the ‘Google of China’, it operates the nation’s largest search engine and offers a diverse product ecosystem, including an online encyclopedia, social network, and various AI-driven products.
CEO: Robin Li
Number of employees: 39,800 (as of 2023)
Market Cap: $33.16 billion (as of March, 2025)
Enterprise Value (EV): $26.38 billion
LTM Revenue: $14.35 billion
LTM EBITDA: $4.53 billion
LTM EV/Revenue: 1.83
LTM EV/EBITDA: 5.83
Recent Transactions: $370 million acquisition of PPP’s online video business (2013); $1.9 billion acquisition of 91 Wireless (2013)
Company Details (Target - YY Live)
YY Live is a popular Chinese video-based entertainment live streaming platform that allows users to engage with live content across a variety of categories, such as gaming, music, and social networking.
Founded in 2011, headquartered in Singapore
CEO: Ting Li (Since August 2024) - When under JOYY
Number of employees: 7000+ - When under JOYY
Market cap: n/a (it was owned by JOYY)
Enterprise Value (EV): $2.1 Billion (sale price)
LTM Revenue: (Full 2024) $2.24 Billion (only available for JOYY)
LTM EBITDA: $167.63 Million (only available for JOYY)
LTM EV/Revenue: 0.19 (only available for JOYY)
LTM EV/EBITDA: 2.49 (only available for JOYY)
Projections and Assumptions
Short-Term Consequences
Baidu's acquisition of YY Live in February 2025 for $2.1 billion is set to strengthen its market position and diversify its revenue streams. The deal is expected to be accretive to Baidu's earnings in the short term, driven by YY Live's profitability and Baidu's strong cash reserves. Additionally, Baidu might achieve cost savings by integrating YY Live into its existing infrastructure, such as AI and cloud services, reducing operational expenses. This integration could enhance efficiency and streamline operations, further boosting profitability.
The acquisition expands Baidu's product portfolio by adding live-streaming capabilities, complementing its AI-driven ecosystem and reducing reliance on advertising revenue. Geographically, it reinforces Baidu's dominance in China's domestic market, particularly in the competitive live-streaming sector, positioning it against rivals like ByteDance and Tencent. Leadership changes, such as Rong Luo's move to head the Mobile Ecosystem Group, highlight Baidu's strategic focus on integrating YY Live into its mobile and AI initiatives.
Market reaction has been positive, with Baidu's stock surging approximately 10% in early March 2025, reflecting investor confidence in its AI advancements and growth strategies. Interestingly, while JOYY’s stock initially jumped 6%, based on premarket trading, it has declined since by over 18%. From some perspectives the decrease in JOYY’s stock value can be attributed to stabilizing market expectations on the acquisition’s cash infusion and mixed sentiment towards the firm’s global competitiveness. Ultimately, broader economic challenges in China and intense competition may temper the sustained gains from Baidu, and JOYY stands to prove itself with a deeper focus on the global markets. Overall, the acquisition aligns with Baidu's AI-driven vision and bolsters its competitive edge in the live-streaming sector in the short term.
Long-Term Upsides
Integrating YY Live’s live-streaming services allows Baidu to expand beyond its traditional search advertising model. This diversification is crucial for reducing reliance on a single revenue source and tapping into the growing digital entertainment market, particularly with livestream shopping, allowing it to compete better with online entertainment rivals such as Douyin and TikTok-parent ByteDance.
The deal releases approximately $1.6 billion from escrow, which Baidu plans to invest in Artificial Intelligence (AI) and cloud infrastructure. This investment is expected to accelerate the development of AI-driven services and enhance Baidu’s cloud computing offerings, aligning with the company’s strategic focus on AI advancements and positioning itself for competitive advantage in China’s AI race. The company has recently announced the upcoming launch of Ernie 5.0, an upgraded AI model with enhanced multimodal capabilities and will continue its increased investment in AI infrastructure. Thus Baidu’s developing expertise in AI and cloud computing will significantly enhance YY Live’s user experience.
YY Live has already made moves into Southeast Asia and other global markets, giving Baidu a much lower-cost pathway to expand its international presence. With mobile entertainment on the rise in these regions, Baidu can leverage its AI expertise and content strategies to build a bigger global audience.
Integrating YY Live’s content with Baidu’s AI technology could lead to innovative applications, such as improved content recommendations and interactive user experiences. This synergy may enhance user satisfaction and open new monetization avenues. Lastly, by merging infrastructure and resources, Baidu can cut costs across cloud services, content management, and marketing.
Risks and Uncertainties
Despite regulatory clearance and revived momentum, the Baidu–YY Live acquisition remains fraught with material risks on both the acquirer and target sides. A primary concern lies in the complexity of integration. YY Live’s legacy infrastructure, user base, and content model may not seamlessly align with Baidu’s broader AI-driven ecosystem. Challenges may arise in standardising user data, reconfiguring monetisation mechanisms, and ensuring platform interoperability. These issues could dilute anticipated synergies or cause delays in execution.
Further uncertainty stems from the integrity of YY Live’s valuation. The original deal in 2020 was struck at a US$3.6 billion price tag, yet concerns over accounting irregularities continue to cast a shadow. Notably, short-seller allegations in 2020 claimed JOYY inflated revenues and fabricated user metrics. Although JOYY has denied these claims, the due diligence process has been criticised for lacking rigour, raising the risk that Baidu may have overpaid for an asset whose economic fundamentals are weaker than presented.
There is also the issue of audience stickiness and platform relevance. Livestreaming consumption patterns in China have evolved significantly since 2020, with user attention shifting toward newer formats such as short-form video and social commerce. YY Live risks obsolescence if Baidu cannot refresh the content strategy or innovate quickly, particularly in a hypercompetitive landscape where platforms like Douyin and WeChat Channels dominate.
From the target side, execution risk following the divestment also looms. JOYY will face pressure to redeploy capital effectively while managing operational disentanglement, including potential disruptions to shared systems or talent attrition during the transition.
Lastly, China’s regulatory environment remains a structural overhang. While current sentiment appears supportive, future clampdowns or shifts in oversight over media platforms could alter deal economics, constrain operational flexibility, or heighten compliance burdens, ultimately undermining value realisation for both parties.
“Baidu Intelligent Cloud's AI-related revenue surged nearly threefold year-on-year. Driven by AI, its cloud business demonstrated robust growth in the fourth quarter, achieving a 26% year-on-year revenue increase during the period.” - Robin, Li (CEO of Baidu)
Sources
JOYY Reports Fourth Quarter and Full Year 2024 Unaudited Financial Results | JOYY Inc.
JOYY Inc. (YY) Statistics & Valuation
Baidu CFO Rong Luo steps down from role, to head mobile ecosystem unit | Reuters
Baidu buys JOYY's China live-streaming unit for $2.1 billion in digital video push | Reuters
