Communication Author：Ruizhi Cheng Editor：Luke Sheehan Oct 31, 2020 07:37 AM (GMT+8)

If Baidu buys YY’s domestic business, the investors should pay more attention to whether Baidu can integrate YY’s business well with its strategy.

A good acquisition is like a partnership. Image credit: PublicDomainPictures/ Pixabay

It is said that Baidu has finished its negotiation to acquire YY’s domestic business. It will be announced officially in November after which the content, technology, and domestic livestreaming team will be under the umbrella of Baidu. However, there is no feedback as yet from Baidu or YY.

For YY, it could be another way to gather cash for its overseas business. Bigo, Hago, and Likee of JOYY have blossomed in many places overseas in the past two years and gradually reduced their independence on Huya. But overseas expansion needs strong and healthy cash flow to support. Therefore, it could be an effective and efficient way for JOYY to get money by selling domestic business which can help JOYY to focus on overseas business

For Baidu, it seems that Baidu can utilize its online traffic to support YY. The problem is how to stabilize the cash flow. However, YY has better profitability compared with Tik Tok and Kuaishou. The daily activities of users of Tik Tok and Kuaishou are nearly 10 times that of YY's domestic business, but the revenue of Tik Tok and Kuaishou is only two or three times that of YY's domestic business – which could explain why Baidu wants to buy YY’s domestic business.

This acquisition could be a perfect business strategy if Baidu is able to integrate YY’s domestic business well with its development plan. Baidu has already had some acquisition cases that are not successful.