China's largest e-commerce company Alibaba Group is planning to buy a stake in Sina Corp's Weibo, the country's most popular microblogging service, Shanghai-based newspaper China Business News reported Monday.
Sources in Alibaba told the paper that investment negotiations between Alibaba and Sina have entered the final phase.
Alibaba has valued Sina Weibo at around $3 billion, the sources said. The report quoted other domestic media sources which reported that Alibaba plans to buy a 15 to 20 percent stake in Sina Weibo.
Alibaba, which runs leading e-commerce platforms Taobao Marketplace and alibaba.com, has a business model that revolves around online advertising and subscription fees.
"We see the potential deal is synergetic to both parties," Credit Suisse said in a research note, published Monday in reaction to the report.
Alibaba's investment in Weibo will help drive Web traffic to Taobao, while providing incremental advertising revenue to Sina Weibo, the note said.
Credit Suisse said that the reported valuation was lower than its internal valuation of $4.4 billion but higher than the implied valuation of $1.8 billion based on Friday's closing share price.
Yang Lei, a spokesman for Alibaba, declined to comment on the news report, China National Radio reported Monday.
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