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Baidu in Tie-Up Talks with UCWeb

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Baidu (NASDAQ: BIDU), a Chinese-language internet search provider, announced on Monday that it is in talks with UCWeb, a mobile browser startup, over a tie-up.

For months, rumors have circulated that Baidu would buy a stake in UCWeb. Yet, only one month ago, UCWeb's CEO Yu Yongfu stated very clearly that the company was not considering any buyout offers.

However, tepid economic growth appears to have changed his mind, as has the reported $1 billion being offered by Baidu.

That amount of money would be difficult to resist for UCWeb, while the deal would provide Baidu with the ability to drive traffic to its mobile search site and its application store. Back in May, Baidu reported that 28.9% of visits to its mobile search website came via UCWeb, so some sort of tie-up makes sense.

Baidu is often referred to as the “Google (NASDAQ: GOOG) of China,” and there were reports in May that Baidu is trying to create an operating system that would hijack Google's Android suite, effectively replacing it with Baidu features.

Last week, Baidu bid $400 million for a 49% stake in UCWeb, but that bid was unsuccessful. It seems that Baidu has returned with a bigger offer for a bigger stake and may have had better luck this time.

In addition, it was announced on Monday that Baidu has formed an alliance with Apple (NASDAQ: AAPL) which will allow Apple to benefit from a revenue share deal seeing it receive a percentage of advertising sales made via its search engine.

On Monday, Baidu traded up about 1% near $121.30.

Follow me @BCallwood.

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