BEIJING, July 16 — Baidu Inc, owner of the largest search engine in China, agreed to buy app store 91 Wireless for US$1.9 billion (RM6 billion) as it seeks a greater share of the market for mobile users.

A binding memorandum of understanding was signed for Baidu to pay US$1.09 billion for the 57.4 per cent stake owned by NetDragon Websoft Inc, according to a NetDragon filing with the Hong Kong stock exchange today. The company will also buy those shares held by other investors on the same terms, it said.

Competition is intensifying in China with Alibaba Group Holding Ltd., the nation’s largest e-commerce company, buying stakes in businesses with heavy exposure on mobile devices, such as Sina Corp.’s Twitter-like Weibo service. Baidu had 82 per cent of desktop searches in China as of March 31 while its mobile app only had 9 per cent of the 1.16 billion wireless subscribers in China as of April, according to data compiled by Bloomberg.

“Baidu is not as well established in the mobile Internet space as the desktop Internet space,” said Andy Yeung, an analyst at Oppenheimer & Co Inc in New York. “It’s a complementary strategy to enhance Baidu’s status in the mobile ecosystem.”

NetDragon shares slumped 21 per cent to HK$19 (RM7.794) as of 10:25am in Hong Kong trading. Baidu shares rose 4.9 per cent to US$101.59 in US trading yesterday.

Sohu.com Inc., owner of China’s third-biggest Web portal, and software company Qihoo 360 Technology Co. also have apps for mobile searches.

Multiple Stores

It’s the biggest acquisition announced by Baidu, according to data compiled by Bloomberg. The company is seeking to bolster its mobile services and tap more users in China who get online from smartphones and tablet computers.

The 91 Wireless business is the largest third-party distributor in China by active users, according to NetDragon, which cited iResearch data.

Unlike the US, where Google Inc. and Amazon.com Inc. dominate sales of applications for the Android operating system, China has hundreds of companies offering mobile software. Lenovo Group Ltd., the world’s biggest personal computer maker, has logged more than 1 billion downloads through its app store since it opened in 2010.

“Mobile app stores are an important entry point to the mobile Internet, and are therefore of great strategic interest to Baidu,” Kaiser Kuo, a spokesman for Baidu in Beijing, said in an e-mail.

NetDragon owns 80.6 million shares in 91 Wireless, which is 57.41 per cent of the company, according to its filing. It didn’t disclose earnings multiples of the business in the statement. – Bloomberg