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As filed with the Securities and Exchange Commission on April 24, 2012.

Registration No. 333-              

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

YOUKU INC.
(Exact name of registrant as specified in its charter)

N/A
(Translation of registrant name into English)

Cayman Islands
(State or other jurisdiction of
incorporation or organization)
  7389
(Primary Standard Industrial
Classification Code Number)
  N/A
(I.R.S. Employer
Identification Number)

11/F, SinoSteel Plaza
8 Haidian Street
Haidian District
Beijing 100080
People's Republic of China
(86-10) 5885-1881

(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

Law Debenture Corporate Services Inc.
400 Madison Avenue, 4th Floor
New York, New York 10017
(212) 750-6474

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications to:

Z. Julie Gao, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
c/o 42/F, Edinburgh Tower, The Landmark
15 Queen's Road, Central
Hong Kong
Phone: +852 3740 4700
Facsimile: +852 3740 4727

 

Michael V. Gisser, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
30th Floor, China World Office 2
1 Jianguomenwai Avenue
Beijing 100004
People's Republic of China
Phone: +86 (10) 6535 5500
Facsimile: +86 (10) 6535 5577

David T. Zhang, Esq.
Jesse Sheley, Esq.
Benjamin Su, Esq.
Kirkland & Ellis International LLP
c/o 26th Floor, Gloucester Tower
The Landmark
15 Queen's Road Central
Hong Kong
Phone: +852 3761 3300
Facsimile: +852 3761 3301

 

Allen C. Wang, Esq.
Latham & Watkins LLP
Unit 2318, China World Office 2
1 Jianguomenwai Avenue
Beijing 100004
People's Republic of China
Phone: +86 (10) 5965 7000
Facsimile: +86 (10) 5965 7001

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after the effective date of this registration statement.

             If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

             If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

             If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   o

 Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

 

o

CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered(1)

  Amount to be
Registered(2)

  Proposed Maximum
Offering Price per
Unit

  Proposed Maximum
Aggregate Offering
Price(3)

  Amount of
Registration Fee

 

Class A ordinary shares, par value US$0.00001 per share

  863,078,895   N/A   US$1,046,799,553.28   US$119,963.23

 

(1)
This registration statement relates to Class A ordinary shares, par value US$0.00001 per share (the "Youku Class A shares"), of Youku Inc. ("Youku," or the "registrant"), an exempted company with limited liability incorporated under the laws of the Cayman Islands, to be issued to holders of Class A ordinary shares and Class B ordinary shares, par value US$0.0001 per share (the "Tudou shares"), of Tudou Holdings Limited ("Tudou"), an exempted company with limited liability incorporated under the laws of the Cayman Islands, pursuant to the agreement and plan of merger, dated March 11, 2012 (the "Merger Agreement"), by and among Youku, Tudou and Two Merger Sub Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Youku. A separate registration statement on Form F-6 has previously been filed (Registration No. 333-170709) for the registration of the registrant's American depositary shares, each representing eighteen Youku Class A shares (the "Youku ADSs"), to be delivered in connection with the proposed Merger (as defined herein).

(2)
Represents the proposed maximum number of Youku Class A shares expected to be offered and sold in the U.S. registered offering and a portion of the Youku Class A shares that are to be offered and sold outside of the United States in the Regulation S offering that may be resold from time to time in the United States or to U.S. persons.

(3)
Estimated solely for the purpose of calculating the registration fee. The registration fee is required by Section 6(b) of the Securities Act of 1933, as amended ("the Securities Act") and computed pursuant to Rules 457(f) and 457(c) under the Securities Act. Pursuant to Rule 457(f) under the Securities Act, the proposed maximum aggregate offering price of the Youku Class A shares is equal to 120,252,677, the Aggregate Tudou Share Sum (as defined below), divided by four (being the number of Class B ordinary shares of Tudou represented by each of Tudou's American depositary shares (the "Tudou ADS"), and then multiplied by US$34.82, the average of the high and low prices of the Tudou ADSs trading on the NASDAQ Global Market on April 20, 2012. The "Aggregate Tudou Share Sum" means the estimated maximum number of Tudou shares which Youku will acquire from Tudou shareholders and Tudou ADS holders in exchange for Youku Class A shares and Youku ADSs, respectively, in the Merger, which includes (1) Tudou shares currently held by Tudou shareholders, (2) Tudou shares underlying outstanding Tudou ADS, and (3) Tudou shares underlying Tudou share options which may be exercised prior to the completion of the Merger.

             THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

   


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The information in this preliminary joint proxy statement/prospectus is not complete and may be changed. Youku Inc. may not sell these securities until the registration statement filed with the Securities and Exchange Commission, in which this preliminary joint proxy statement/prospectus is included, is declared effective. This preliminary joint proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale of these securities is not permitted.

SUBJECT TO COMPLETION


LOGO
 
LOGO

Youku Inc.

and

Tudou Holdings Limited

PRELIMINARY JOINT PROXY STATEMENT



Youku Inc.

PRELIMINARY PROSPECTUS



Dear Shareholder:

           Youku Inc. ("Youku"), Tudou Holdings Limited ("Tudou") and Two Merger Sub Inc. ("Merger Sub"), a wholly owned subsidiary of Youku, have entered into an agreement and plan of merger (the "Merger Agreement") dated March 11, 2012 (such Merger Agreement being in the form attached as Appendix A to this joint proxy statement/prospectus). Pursuant to the Merger Agreement and a plan of merger attached as Annex A to the Merger Agreement (the "Plan of Merger"), Merger Sub will merge with and into Tudou (the "Merger"), with Tudou continuing as the surviving entity and as a wholly owned subsidiary of Youku. Following the Merger, Youku Inc. will be renamed as "Youku Tudou Inc.," and Tudou will cease to be a publicly traded company.

           If the Merger is completed, the merger consideration that Tudou shareholders and Tudou ADS holders will respectively receive in the Merger is as follows:

    each outstanding Class A ordinary share of Tudou, par value US$0.0001 per share ("Tudou Class A share"), and each outstanding Class B ordinary share of Tudou, par value US$0.0001 per share ("Tudou Class B share" and, together with Tudou Class A shares, the "Tudou shares"), will be cancelled in consideration of the right to receive 7.177 (the "Share Exchange Ratio") Youku Class A ordinary shares, par value US$0.00001 per share ("Youku Class A shares") (such number of Youku Class A shares, the "Per Share Merger Consideration"); and

    each outstanding Tudou American depositary share representing four Tudou Class B shares ("Tudou ADS") will be surrendered in consideration of the right to receive 1.595 (the "ADS Exchange Ratio") Youku American depositary shares, each representing 18 Youku Class A shares ("Youku ADS") (such number of Youku ADSs, the "Per ADS Merger Consideration" and together with the Per Share Merger Consideration, the "Merger Consideration");

    provided that,

    each Tudou share issued and outstanding that is (1) issued to the depositary and reserved for future grants under Tudou's share incentive plan or (2) repurchased and held by Tudou in treasury either in the form of Tudou shares or Tudou ADSs (collectively, the "Excluded Tudou Shares") shall automatically be cancelled, shall no longer be issued or outstanding and shall cease to exist, and no consideration shall be delivered or deliverable in exchange; and

    Tudou shareholders who have validly exercised their right to dissent from the Merger pursuant to Section 238 of the Cayman Islands Companies Law Cap. 22 (Law 3 of 1961, as consolidated and revised) (the "Cayman Companies Law") and have not effectively withdrawn or lost their appraisal rights shall not be entitled to receive the consideration with respect to Tudou shares owned by such persons ("Dissenter Shares") and will instead receive the appraised or agreed value under the Cayman Companies Law.

           The Youku ADSs are listed on the New York Stock Exchange (the "NYSE") under the stock symbol "YOKU." The Tudou ADSs are listed on the NASDAQ Global Market (the "NASDAQ") under the stock symbol "TUDO." The closing price of a Youku ADS on the NYSE and a Tudou ADS on the NASDAQ was US$21.82 and US$32.63, respectively, on April 23, 2012, the trading day immediately preceding the date of this joint proxy statement/prospectus, and US$25.01 and US$15.39, respectively, on March 9, 2012, the trading day immediately preceding the public announcement of the proposed Merger.

           The Merger cannot be completed unless the issuance of Youku Class A shares, including Youku Class A shares underlying Youku ADSs, as consideration for the Merger (the "Share Issuance") is authorized and approved by a resolution passed by an affirmative vote of Youku shareholders representing a majority of the aggregate voting power and an affirmative vote by holders of a majority of the total outstanding Youku Class A shares, in each case, at a shareholders meeting of Youku. In addition, the change of Youku's legal name from "Youku Inc." to "Youku Tudou Inc." (the "Name Change") cannot be completed unless authorized and approved by a special resolution passed by an affirmative vote of a majority of at least two-thirds of such shareholders of Youku as, being entitled to do so, vote in person or by proxy as a single class at a shareholders meeting of Youku. An annual general meeting of Youku will be held at                             , Hong Kong on                , 2012 at        (Hong Kong time) (the "Youku AGM"), where Youku shareholders will vote upon the resolutions to authorize and approve the Share Issuance and the Name Change. Youku's board of directors (the "Youku Board") unanimously recommends that holders of Youku shares and Youku ADSs vote "FOR" the resolutions to authorize and approve the Share Issuance and the Name Change.

           In addition, the Merger cannot be completed unless the shareholders of Tudou authorize and approve the Merger Agreement, the Plan of Merger and the Merger by a special resolution passed by an affirmative vote of a majority of at least two-thirds of such shareholders of Tudou, as being entitled to do so, vote in person or by proxy as a single class at a shareholders meeting of Tudou. An annual general meeting of Tudou will be held at                , on                , 2012 at                (local time) (the "Tudou AGM"), where Tudou shareholders will vote upon the resolution to authorize and approve the Merger Agreement, the Plan of Merger and the Merger. Tudou's board of directors (the "Tudou Board") unanimously recommends that holders of Tudou shares and Tudou ADSs vote "FOR" the resolutions to authorize and approve the Merger Agreement, the Plan of Merger and the Merger.

           This joint proxy statement/prospectus provides the shareholders and ADS holders of Youku and Tudou with detailed information about the shareholder meetings and the Merger. You can also obtain information from publicly available documents filed with or furnished to the Securities and Exchange Commission (the "SEC") by Youku and Tudou. We encourage you to read this entire document carefully before voting. In particular, you should carefully consider the section entitled "Risk Factors" beginning on page 53.

           We look forward to the successful completion of the Merger.

 
   
   
   
   
   
Very sincerely yours,            

Youku Inc.

 

Tudou Holdings Limited

By:

 




 

By:

 


 
    Name:   Victor Wing Cheung Koo       Name:   Gary Wei Wang
    Title:   Chairman of the Board of Directors and Chief Executive Officer       Title:   Chairman of the Board of Directors and Chief Executive Officer

           Neither the SEC nor any state securities regulator has approved or disapproved of the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offence.

           This joint proxy statement/prospectus is dated                        , 2012.


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THE JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES ADDITIONAL INFORMATION

        The joint proxy statement/prospectus incorporates important business and financial information about Youku from documents that Youku has filed with or furnished to the SEC, but that have not been included in this joint proxy statement/prospectus. Please see "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively, for more details. This joint proxy statement/prospectus also refers to information about Tudou from documents that Tudou has filed with or furnished to the SEC, but that have not been included in or delivered with this proxy statement/prospectus.

        You can obtain any of the documents filed with or furnished to the SEC by Youku or Tudou at no cost from the SEC's website at www.sec.gov. You may also request copies of these documents, including documents incorporated by reference into this joint proxy statement/prospectus, at no cost by contacting either Youku or Tudou.

        Youku will provide you with copies of the documents it has filed with the SEC relating to Youku, without charge, upon written request to:

    Ryan Cheung
    Corporate Finance Director
    Youku Inc.
    11/F, SinoSteel Plaza
    8 Haidian Street
    Haidian District, Beijing 100080
    People's Republic of China
    Tel: (+86 10) 5885-1881 x6090
    Email: ryan.cheung@youku.com

        Tudou will provide you with copies of the documents it has filed with the SEC relating to Tudou, without charge, upon written request to:

    Michael Fu
    Investor Relations Director
    Tudou Holdings Limited
    Building No. 6, X2 Creative Park
    1238 Xietu Road, Xuhui District, Shanghai 200032
    People's Republic of China
    Tel: (+86 21) 5170-2375
    Email: mfu@tudou.com

        In order for you to receive timely delivery of the documents in advance of the relevant shareholder meeting, you must request the documents no later than five business days prior to the relevant shareholder meeting, or                        , 2012.


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ABOUT THE JOINT PROXY STATEMENT/PROSPECTUS

        This document, which forms part of a registration statement on Form F-4 filed with the SEC by Youku (File No. 333-                ), constitutes a prospectus of Youku under Section 5 of the Securities Act with respect to the Youku Class A shares to be issued to Tudou shareholders and the Youku ADSs to be issued to Tudou ADS holders in the Merger pursuant to the Merger Agreement. This document is also (1) a notice of meeting and a proxy statement under Cayman Islands law with respect to the Youku AGM, at which Youku shareholders will be asked to consider and vote upon proposals to approve the Share Issuance and the Name Change, and (2) a notice of meeting and a proxy statement under Cayman Islands law with respect to the Tudou AGM, at which Tudou shareholders will be asked to consider and vote upon a proposal to authorize and approve the Merger Agreement, the Plan of Merger, the Merger and certain related proposals.

        No person has been authorized to provide you with information that is different from what is contained in, or incorporated by reference into, this joint proxy statement/prospectus, and, if given or made, such information must not be relied upon as having been authorized. This joint proxy statement/prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any circumstances in which such offer or solicitation is unlawful. The distribution or possession of the joint proxy statement/prospectus in or from certain jurisdictions may be restricted by law. You should inform yourself about and observe any such restrictions, and neither Youku nor Tudou accepts any liability in relation to any such restrictions.

        Neither the distribution of this joint proxy statement/prospectus nor the issuance by Youku of Youku Class A shares or Youku ADSs in connection with the Merger shall, under any circumstances, create any implication that there has been no change in the affairs of Youku or Tudou since the date of this joint proxy statement/prospectus or that the information contained in this joint proxy statement/prospectus is correct as of any time subsequent to its date.

        Information contained in this joint proxy statement/prospectus regarding Youku has been provided by Youku and information contained in this joint proxy statement/prospectus regarding Tudou has been provided by Tudou.

        Unless otherwise indicated and except where the context otherwise requires, references in this joint proxy statement/prospectus to:

    "China" or "PRC" refer to People's Republic of China, excluding, for the purpose of this joint proxy statement/prospectus only, Taiwan, Hong Kong and Macau;

    "Tudou" refer to Tudou Holdings Limited, an exempted company with limited liability organized under the laws of the Cayman Islands, and, unless the context otherwise requires, its subsidiaries and consolidated affiliated entities;

    "Youku" refer to Youku Inc., an exempted company with limited liability organized under the laws of the Cayman Islands, and, unless the context otherwise requires, its subsidiaries and consolidated affiliated entities; and

    all references to "RMB" or "Renminbi" are to the legal currency of China, and all references to "$," "dollars," "US$" and "U.S. dollars" are to the legal currency of the United States.

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LOGO

Youku Inc.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON                    , 2012

Dear Shareholder:

        NOTICE IS HEREBY GIVEN that an annual general meeting (the "Youku AGM") of Youku Inc. ("Youku") will be held at                                        , Hong Kong on                        , 2012, beginning at         (Hong Kong time).

        Only holders of Class A ordinary shares of Youku, par value US$0.00001 per share ("Youku Class A shares") and holders of Class B ordinary shares of Youku, par value US$0.00001 per share ("Youku Class B shares" and, together with the Youku Class A shares, the "Youku shares") of record on the close of business on                        , 2012 (New York City time) (the "Youku share record date") or their proxy holders are entitled to vote at the Youku AGM or any adjournment or postponements thereof. The chairman of Youku's board of directors has undertaken to demand poll voting at the Youku AGM. Accordingly, voting at the Youku AGM will take place by poll voting, with each Youku Class A shareholder having one vote for each Youku Class A share and each Youku Class B shareholder having three votes for each Youku Class B share held as of the close of business on the Youku share record date. At the meeting, you will be asked to consider and vote upon the following resolutions:

    RESOLVED, as an ordinary resolution:

      THAT the issuance of Youku Class A shares, including Youku Class A shares underlying Youku American depositary shares (the "Share Issuance"), that constitute the consideration for the merger (the "Merger") pursuant to the agreement and plan of merger (the "Merger Agreement") dated March 11, 2012, by and among Youku, Tudou Holdings Limited ("Tudou"), an exempted company with limited liability incorporated under the laws of the Cayman Islands, and Two Merger Sub Inc. ("Merger Sub"), an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Youku, be and hereby is authorized and approved;

    RESOLVED, as a special resolution:

      THAT the change of Youku's legal name (the "Name Change") from "Youku Inc." to "Youku Tudou Inc." upon the effectiveness of the Merger, be and hereby is authorized and approved; and

    RESOLVED, as an ordinary resolution:

      THAT, in the event that there are insufficient proxies received at the time of the Youku AGM to authorize and approve the Share Issuance and the Name Change proposed at the Youku AGM, the chairman of the Youku AGM be instructed to adjourn the Youku AGM in order to allow Youku to solicit additional proxies in favor of the authorization and approval of the Share Issuance and the Name Change.

        Youku has filed with the U.S. Securities and Exchange Commission (the "SEC") a registration statement on Form F-4, which includes a preliminary prospectus of Youku relating to the Share Issuance and which also functions as a joint proxy statement of Youku and Tudou under Cayman Islands law (the "Joint Proxy Statement/Prospectus"). The Merger Agreement is in the form attached as Appendix A to the Joint Proxy Statement/Prospectus, which will be produced and made available for inspection at the Youku AGM. Pursuant to the Merger Agreement, Merger Sub will be merged with and into Tudou, with Tudou continuing as the surviving entity and as a wholly owned subsidiary of Youku.


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        The Joint Proxy Statement/Prospectus can be viewed free of charge on the SEC's website at www.sec.gov. A physical copy of the Joint Proxy Statement/Prospectus can be mailed to you without charge upon written request to Youku Inc., 11/F, SinoSteel Plaza, 8 Haidian Street, Beijing 100080, People's Republic of China, or by contacting Ryan Cheung, Corporate Finance Director, Youku Inc., by telephone at (+8610) 5885-1881 x6090, or email at ryan.cheung@youku.com. We urge you to read the entire Joint Proxy Statement/Prospectus carefully.

        If you own Youku ADSs on the close of business on                , 2012 (New York City time) (the "Youku ADS record date"), you cannot vote on your ADSs at the Youku AGM directly, but you may instruct Citibank, N.A. (the "Youku depositary"), as depositary under a deposit agreement, dated as of December 8, 2010, by and among Youku, the Youku depositary and all holders and beneficial owners of Youku ADSs issued thereunder (the "Youku Deposit Agreement"), as the holder of Youku Class A shares underlying Youku ADSs, how to vote the Youku Class A shares underlying your ADSs. The Youku depositary must receive such instructions no later than           a.m. (New York City time) on                , 2012 in order to vote the underlying Youku Class A shares at the Youku AGM. Alternatively, you may vote at the Youku AGM if you surrender your Youku ADSs to the Youku depositary, certify that you have not given, and will not give, directly or indirectly, voting instructions to the Youku depositary as to the Youku ADSs presented for cancellation, pay the Youku depositary's fees required for such surrender, provide instructions for the registration of the corresponding Youku Class A shares before           a.m. (New York City time) on                , 2012, and become a holder of Youku Class A shares by the close of business on                , 2012 (New York City time). In addition, if you hold your ADSs through a financial intermediary such as a broker, you must rely on the procedures of the financial intermediary through which you hold your Youku ADSs if you wish to vote at the Youku AGM.

        After careful consideration, Youku's board of directors has unanimously (1) approved the Merger Agreement, the Plan of Merger, the Merger and the other transactions contemplated by the Merger Agreement, (2) directed that the Share Issuance and the Name Change be submitted to Youku shareholders for authorization and approval, and (3) recommended that Youku shareholders authorize and approve the Share Issuance and the Name Change. Accordingly, the Youku Board recommends that Youku shareholders vote "FOR" the resolutions to authorize and approve the Share Issuance and the Name Change.

        The Share Issuance must be authorized and approved by an affirmative vote by holders of Youku shares representing a majority of the aggregate voting power and an affirmative vote by holders of a majority of the total outstanding Youku Class A shares. The Name Change must be authorized and approved by an affirmative vote of a majority of at least two-thirds of such shareholders of Youku as, being entitled to do so, vote in person or by proxy as a single class at the Youku AGM.

        Regardless of the number of Youku shares that you own, your vote is very important. Even if you plan to attend the Youku AGM in person, we request that you submit your proxy in accordance with the instructions set forth on the proxy card as promptly as possible. You should simply indicate on your proxy card how you want to vote, sign and date the proxy card, and mail the proxy card in the enclosed return envelope as soon as possible to ensure that it will be received by Youku no later than           a.m. on                , 2012 (New York City Time) so that your Youku shares will be represented and may be voted at the Youku AGM. If you receive more than one proxy card because you own Youku shares that are registered in different names, please vote all of your Youku shares shown on all of your proxy cards in accordance with the instructions set forth on the proxy card.

        Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the Youku AGM and vote your Youku shares in person. Please note, however, that if your Youku shares are held of record by a broker, bank or other nominee and you wish to vote at the Youku AGM in person, you must obtain from the record holder a proxy issued in your name. If you submit your proxy card without indicating how you wish to vote, the Youku shares represented by your proxy card will be voted FOR the resolution to authorize and approve the Share Issuance and the Name Change, and FOR the resolution that, in the event that there are insufficient


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proxies received at the time of the Youku AGM to authorize and approve the Share Issuance and the Name Change proposed at the Youku AGM, the chairman of the Youku AGM be instructed to adjourn the Youku AGM in order to allow Youku to solicit additional proxies in favor of the authorization and approval of the Share Issuance and the Name Change, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Youku shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines. Further, if holders of Youku ADSs do not give voting instructions to the Youku depositary, they will be deemed to have instructed the Youku depositary to give a discretionary proxy to a person designated by Youku (the "Youku Designee") under the Youku Deposit Agreement, unless Youku informs the Youku depositary that (1) Youku does not wish such discretionary proxy to be given, (2) substantial opposition exists in respect of the contemplated Share Issuance and the Name Change, or (3) the rights of holders of Youku shares may be materially adversely affected by the contemplated Share Issuance and the Name Change. It is Youku's intention that the Youku Designee vote all such unvoted Youku Class A shares FOR the resolutions to authorize and approve the Share Issuance and the Name Change and FOR any resolution to adjourn the Youku AGM.

        If you have any questions or need assistance in voting your Youku shares or Youku ADSs, please contact Ryan Cheung, Corporate Finance Director, Youku Inc., by telephone at (+8610) 5885-1881 x6090, or email at ryan.cheung@youku.com.

Notes:

    1.
    In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the joint holders and for this purpose seniority shall be determined by the order in which the names stand in the register of members of Youku.

    2.
    The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorized.

    3.
    A proxy need not be a member (registered shareholder) of Youku.

    4.
    The chairman of the meeting may at his discretion direct that a proxy card shall be deemed to have been duly deposited. A proxy card that is not deposited in the manner permitted shall be invalid.

    5.
    Votes given in accordance with the terms of a proxy card shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Youku share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by Youku at Youku Inc., 11/F, SinoSteel Plaza, 8 Haidian Street, Beijing 100080, People's Republic of China, before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.

By Order of the Board of Directors,

Name:   Victor Wing Cheung Koo
Title:   Chairman of the Board of Directors and Chief Executive Officer

 

 

                        , 2012

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LOGO

Tudou Holdings Limited

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON                        , 2012

Dear Shareholder:

        NOTICE IS HEREBY GIVEN that an annual general meeting (the "Tudou AGM") of Tudou Holdings Limited ("Tudou") will be held on                  , 2012, beginning at            local time at                   , People's Republic of China.

        Only holders of ordinary shares of Tudou, par value US$0.0001 per share ("Tudou shares"), of record on the close of business on                  , 2012 (New York City time) (the "Tudou share record date") or their proxy holders are entitled to vote at the Tudou AGM or any adjournment or postponements thereof. At the meeting, you will be asked to consider and vote upon the following resolutions:

    RESOLVED, as a special resolution:

      THAT (1) the agreement and plan of merger (the "Merger Agreement"), dated March 11, 2012, by and among Tudou, Youku Inc. ("Youku"), an exempted company with limited liability incorporated under the laws of the Cayman Islands, and Two Merger Sub Inc. ("Merger Sub"), an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Youku, (2) the plan of merger by and among Tudou, Youku and Merger Sub (the "Plan of Merger") (such Merger Agreement being in the form attached as Appendix A to the Joint Proxy Statement/Prospectus (as defined below) and such Plan of Merger being in the form attached as Annex A to the Merger Agreement, and each of which will also be produced and made available for inspection at the Tudou AGM), pursuant to which Merger Sub will merge with and into Tudou (the "Merger"), and (3) the Merger be and hereby are authorized and approved;

    RESOLVED, as an ordinary resolution:

      THAT, Messrs. Gary Wei Wang, Hany Nada, David M. Hand, Ted Tak-Tai Lee and Conor Chia-hung Yang (the "Tudou Directors") be and hereby are re-elected as the directors of Tudou (the "Re-election of Tudou Directors"); and

    RESOLVED, as an ordinary resolution:

      THAT, in the event that there are insufficient proxies received at the time of the Tudou AGM to authorize and approve the Merger Agreement, the Plan of Merger and the Merger or approve the Re-election of Tudou Directors proposed at the Tudou AGM, the chairman of the Tudou AGM be instructed to adjourn the Tudou AGM in order to allow Tudou to solicit additional proxies in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the approval of the Re-election of Tudou Directors.

        Youku has filed with the U.S. Securities and Exchange Commission (the "SEC") a registration statement on Form F-4, which includes a prospectus of Youku relating to Youku shares and Youku ADSs to be offered as consideration in the Merger and which also functions as a joint proxy statement of Youku and Tudou under Cayman Islands law (the "Joint Proxy Statement/Prospectus"). The Merger Agreement is in the form attached as Appendix A to the Joint Proxy Statement/Prospectus, which will be produced and made available for inspection at the Tudou AGM. The Joint Proxy Statement/Prospectus can be viewed free of charge on the SEC's website at www.sec.gov. A physical copy of the Joint Proxy Statement/Prospectus can be mailed to you without charge upon written request to Investor


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Relations, Tudou Holdings Limited, Building No. 6, X2 Creative Park, 1238 Xietu Road, Xuhui District, Shanghai 200032, People's Republic of China, or by contacting Michael Fu, Investor Relations Director, Tudou Holdings Limited, by telephone at (+86 21) 5170-2375 or by email at mfu@tudou.com. We urge you to read the entire Joint Proxy Statement/Prospectus carefully.

        If you own Tudou ADSs on the close of business on                  , 2012 (New York City time) (the "Tudou ADS record date"), you cannot vote at the Tudou AGM directly, but you may instruct the Bank of New York Mellon (the "Tudou depositary"), as depositary under the deposit agreement, dated as of August 16, 2011, by and among Tudou, the Tudou depositary and all holders and beneficial owners of Tudou ADSs issued thereunder (the "Tudou Deposit Agreement"), as the holder of the Tudou shares underlying the ADSs, how to vote the Tudou shares underlying your ADSs. The Tudou depositary must receive such instructions no later than             a.m. New York City time on                  , 2012 in order to vote the underlying Tudou shares at the Tudou AGM. Alternatively, you may vote at the Tudou AGM if you surrender your Tudou ADSs to the Tudou depositary, pay the Tudou depositary's fees required for such surrender, provide instructions for the registration of the corresponding Tudou shares before             a.m. New York City time on                  , 2012, and become a holder of Tudou shares by the close of business on                   , 2012 (New York City time). In addition, if you hold your ADSs through a financial intermediary such as a broker, you must rely on the procedures of the financial intermediary through which you hold your Tudou ADSs if you wish to vote at the Tudou AGM.

        After careful consideration, Tudou's board of directors has unanimously approved the Merger Agreement and recommends that you vote (1) "FOR" the resolution to authorize and approve the Merger Agreement, the Plan of Merger, and the Merger (2) "FOR" the resolution to approve the Re-election of Tudou Directors, and (3) "FOR" the resolution to instruct the chairman of the Tudou AGM to adjourn the Tudou AGM in order to allow Tudou to solicit additional proxies in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the approval of the Re-election of Tudou Directors in the event that there are insufficient proxies received to authorize and approve the Merger Agreement, the Plan of Merger and the Merger or to approve the Re-election of Tudou Directors.

        In order for the Merger to be completed, the Merger Agreement, the Plan of Merger and the Merger must be authorized and approved by a special resolution of Tudou passed by an affirmative vote of a majority of at least two-thirds of such shareholders of Tudou as, being entitled to do so, vote in person or by proxy as a single class at the Tudou AGM.

        The Re-election of Tudou Directors must be approved by an ordinary resolution of Tudou passed by a majority of the votes cast by such shareholders of Tudou as, being entitled to do so, vote in person or by proxy as a single class at the Tudou AGM.

        Regardless of the number of Tudou shares that you own, your vote is very important. Even if you plan to attend the Tudou AGM in person, we request that you submit your proxy in accordance with the instructions set forth on the proxy card as promptly as possible. You should simply indicate on your proxy card how you want to vote, sign and date the proxy card, and mail the proxy card in the enclosed return envelope as soon as possible but in any event so that it is received by Tudou no later than             a.m. on                  , 2012 (New York City time). If you receive more than one proxy card because you own Tudou shares that are registered in different names, please vote all of your Tudou shares shown on all of your proxy cards in accordance with the instructions set forth on the proxy card.

        Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the Tudou AGM and vote your Tudou shares in person. Please note, however, that if your Tudou shares are held of record by a broker, bank or other nominee and you wish to vote at the Tudou AGM in person, you must obtain from the record holder a proxy issued in your name. If you submit your proxy card without indicating how you wish to vote, the Tudou shares represented by your proxy card will be voted (1) "FOR" the resolution to authorize and approve the Merger Agreement, the Plan of Merger, and the Merger (2) "FOR" the resolution to approve the Re-election of Tudou Directors, and (3) "FOR" the resolution to instruct the chairman of the Tudou


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AGM to adjourn the Tudou AGM in order to allow Tudou to solicit additional proxies in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the approval of the Re-election of Tudou Directors in the event that there are insufficient proxies received to authorize and approve the Merger Agreement, the Plan of Merger and the Merger or to approve the Re-election of Tudou Directors, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Tudou shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines. Furthermore, if banks, brokers or other nominee holders of Tudou ADSs do not timely receive specific voting instructions from the beneficial owners of Tudou ADSs, they may, under the terms of Tudou Deposit Agreement, be deemed to have instructed the Tudou depositary to give a discretionary proxy to a person designated by Tudou (the "Tudou Designee"). Unless Tudou notifies the Tudou depositary that this provision will not apply, the Tudou Designee will receive a proxy from the Tudou depositary and will vote all such uninstructed Tudou Class B shares underlying Tudou ADSs FOR the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger, FOR the approval of the Re-election of Tudou Directors and FOR any adjournment of the Tudou AGM.

        Shareholders who continue to hold their Tudou shares in their own name until the consummation of the Merger will have the right to seek appraisal and payment of the fair value of their Tudou shares if the Merger is completed, but only if they deliver to Tudou, before the vote is taken on the resolution to authorize and approve the Merger Agreement, the Plan of Merger and the Merger, a written objection to the Merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Companies Law for the exercise of appraisal rights, which is attached as Appendix E to the Joint Proxy Statement/Prospectus. The fair value of your Tudou shares as determined under that statute could be more than, the same as, or less than the merger consideration you would receive pursuant to the Merger Agreement if you did not exercise appraisal rights with respect to your Tudou shares.

        TUDOU ADS HOLDERS WILL NOT HAVE THE RIGHT TO SEEK APPRAISAL AND PAYMENT OF THE FAIR VALUE OF THE TUDOU SHARES UNDERLYING THEIR TUDOU ADSs. THE TUDOU DEPOSITARY WILL NOT ATTEMPT TO EXERCISE ANY APPRAISAL RIGHTS WITH RESPECT TO ANY OF THE TUDOU SHARES THAT IT HOLDS, EVEN IF A TUDOU ADS HOLDER REQUESTS THE TUDOU DEPOSITARY TO DO SO. TUDOU ADS HOLDERS WISHING TO EXERCISE APPRAISAL RIGHTS MUST SURRENDER THEIR TUDOU ADSs TO THE TUDOU DEPOSITARY, PAY THE TUDOU DEPOSITARY'S FEES REQUIRED FOR SUCH SURRENDER, PROVIDE INSTRUCTIONS FOR THE REGISTRATION OF THE CORRESPONDING TUDOU SHARES BEFORE             A.M. NEW YORK CITY TIME ON                  , 2012, AND BECOME HOLDERS OF TUDOU SHARES BY THE CLOSE OF BUSINESS ON                  , 2012 (NEW YORK CITY TIME). THEREAFTER, SUCH FORMER TUDOU ADS HOLDERS MUST COMPLY WITH THE PROCEDURES AND REQUIREMENTS FOR EXERCISING APPRAISAL RIGHTS WITH RESPECT TO THE TUDOU SHARES UNDER SECTION 238 OF THE CAYMAN COMPANIES LAW.

        PLEASE DO NOT SEND YOUR SHARE CERTIFICATES OR ADSs AT THIS TIME. IF THE MERGER IS COMPLETED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR SHARE CERTIFICATES OR ADSs.

        If you have any questions or need assistance in voting your Tudou shares or Tudou ADSs, you can contact Michael Fu, Investor Relations Director, Tudou Holdings Limited, by telephone at (+86 21) 5170-2375, or email at mfu@tudou.com.

Notes:

    1.
    In the case of joint holders the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the joint holders and for this purpose seniority shall be determined by the order in which the names stand in the register of members of Tudou.

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    2.
    The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorized.

    3.
    A proxy need not be a member (registered shareholder) of Tudou.

    4.
    The chairman of the meeting may at his discretion direct that a proxy card shall be deemed to have been duly deposited. A proxy card that is not deposited in the manner permitted shall be invalid.

    5.
    Votes given in accordance with the terms of a proxy card shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Tudou share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by Tudou at Investor Relations, Tudou Holdings Limited, Building No. 6, X2 Creative Park, 1238 Xietu Road, Xuhui District, Shanghai 200032, People's Republic of China before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.

By Order of the Board of Directors,



   
Name:   Gary Wei Wang    
Title:   Chairman of the Board of Directors and Chief Executive Officer
                  , 2012    

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ANNUAL GENERAL MEETINGS OF YOUKU AND TUDOU

    1  

SUMMARY

   
19
 

The Companies

   
19
 

Risk Factors (page 53)

    20  

The Annual General Meeting of Youku Shareholders (page 88)

    20  

The Annual General Meeting of Tudou Shareholders (page 93)

    22  

The Merger Agreement and Plan of Merger (page 134)

    24  

Merger Consideration (page 134)

    24  

Treatment of Tudou Share Options (page 136)

    25  

Reasons for the Merger and Recommendation of the Youku Board (page 102)

    25  

Reasons for the Merger and Recommendation of the Tudou Board (page 105)

    25  

Opinion of Allen & Company LLC as Financial Advisor to Youku (page 106)

    26  

Opinion of Morgan Stanley Asia Limited as Financial Advisor to Tudou (page 113)

    26  

Conditions to the Completion of the Merger (page 149)

    26  

Termination of the Merger Agreement (page 150)

    27  

Fees and Expenses (page 152)

    28  

Listing of Youku ADSs (page 144)

    28  

Delisting of Tudou ADSs (page 144)

    28  

Acquisition Proposals Relating to Tudou (page 145)

    28  

Competing Proposals Relating to Youku (page 145)

    29  

Appraisal Rights (page 130)

    30  

Board Representation Rights (page 147)

    30  

Interests of Tudou's Directors and Executive Officers in the Merger (page 122)

    31  

Lock-up Restriction for Tudou Voting Shareholders

    31  

No Regulatory Approvals Necessary to Complete the Merger

    31  

Accounting Treatment (page 124)

    31  

Material Tax Consequences of the Merger

    31  

Comparison of Rights of Holders of Youku Securities and Tudou Securities (page 228)

    33  

Comparative Market Price and Dividend Information

    33  

Exchange Rates

    35  

SELECTED HISTORICAL FINANCIAL DATA OF YOUKU

   
36
 

SELECTED HISTORICAL FINANCIAL DATA OF TUDOU

   
40
 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

   
43
 

HISTORICAL AND PRO FORMA PER SHARE DATA

   
52
 

RISK FACTORS

   
53
 

Risks Related to the Merger and the Combined Business

   
53
 

Risks Related to Tudou

    55  

Risks Related to an Investment in Youku Class A Shares and Youku ADSs

    86  

FORWARD-LOOKING STATEMENTS

   
87
 

THE ANNUAL GENERAL MEETING OF YOUKU SHAREHOLDERS

   
88
 

Date, Time and Place

   
88
 

Matters to be Considered at the Youku AGM

    88  

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Recommendation of Youku's Board of Directors

    88  

Record Date and Quorum

    88  

Vote Required; Voting Agreements between Tudou and Certain Youku Shareholders

    89  

Youku Shareholders and ADS Holders Entitled to Vote; Voting Materials

    89  

Proxy Holders for Registered Youku Shareholders

    90  

Voting of Proxies and Failure to Vote; Discretionary Proxy of Youku Under Youku Deposit Agreement

    91  

Revocability of Proxies

    91  

Whom to Call for Assistance

    92  

Solicitation of Proxies

    92  

Other Business

    92  

THE ANNUAL GENERAL MEETING OF TUDOU SHAREHOLDERS

   
93
 

Date, Time and Place

   
93
 

Matters to be Considered at the Tudou AGM

    93  

Recommendation of Tudou's Board of Directors

    93  

Quorum

    93  

Vote Required; Voting Agreements between Youku and Certain Tudou Shareholders

    93  

Tudou Shareholders and ADS Holders Entitled to Vote; Voting Materials

    94  

Proxy Holders for Registered Tudou Shareholders

    95  

Voting of Proxies and Failure to Vote; Discretionary Proxy of Tudou Under Tudou Deposit Agreement

    95  

Revocability of Proxies

    96  

Whom to Call for Assistance

    96  

Solicitation of Proxies

    96  

Other Business

    96  

THE MERGER

   
97
 

Background of the Merger

   
97
 

Reasons for the Merger and Recommendation of the Youku Board

    102  

Reasons for the Merger and Recommendation of the Tudou Board

    105  

Opinion of Allen & Company LLC as Financial Advisor to Youku

    106  

Opinion of Morgan Stanley Asia Limited as Financial Advisor to Tudou

    113  

Effects of the Merger to Tudou

    122  

Lock-up Restriction for Tudou Voting Shareholders

    122  

Interests of Tudou's Directors and Executive Officers in the Merger

    122  

Accounting Treatment

    124  

Material U.S. Federal Income Tax Consequences of the Merger

    125  

Material PRC Income Tax Consequences of the Merger

    129  

Material Cayman Islands Tax Consequences of the Merger

    130  

Appraisal Rights

    130  

Effects on Tudou if the Merger is Not Completed

    133  

THE MERGER AGREEMENT AND PLAN OF MERGER

   
134
 

Structure and Completion of the Merger

   
134
 

Memorandum and Articles of Association; Directors and Officers of the Surviving Company

    134  

Merger Consideration

    134  

Treatment of Tudou Share Options

    136  

Exchange Procedures

    136  

Representations and Warranties

    137  

Conduct of Business Prior to Closing

    142  

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Listing of Youku ADSs

    144  

Delisting of Tudou ADSs

    144  

Acquisition Proposals Relating to Tudou; Tudou Board Recommendation

    145  

Competing Proposals Relating to Youku; Youku Board Recommendation

    145  

Shareholders' Meetings

    146  

Directors' and Officers' Insurance; Indemnification

    147  

Board Representation Rights

    147  

Tudou Corporate Structure Matters

    148  

Non-Competition Agreements

    148  

Youku Memorandum and Articles of Association

    148  

Transition Management Committee. 

    148  

Conditions to the Completion of the Merger

    149  

Termination of the Merger Agreement

    150  

Effect of Termination

    151  

Termination Fees

    151  

Fees and Expenses

    152  

Amendment and Waiver

    152  

Remedies

    153  

THE VOTING AGREEMENTS

   
154
 

Voting Agreements between Youku and Certain Tudou Shareholders

   
154
 

Voting Agreements between Tudou and Certain Youku Shareholders

    155  

IMPORTANT INFORMATION REGARDING YOUKU AND MERGER SUB

   
157
 

Important Information Regarding Youku

   
157
 

Important Information Regarding Merger Sub

    158  

IMPORTANT INFORMATION REGARDING TUDOU

   
159
 

Description of Tudou's Business

   
159
 

Operating and Financial Review and Prospects of Tudou

    195  

Ownership of Tudou Shares by Certain Beneficial Owners, Directors and Executive Officers

    224  

COMPARISON OF RIGHTS OF HOLDERS OF YOUKU SECURITIES AND TUDOU SECURITIES

   
228
 

Comparison of Rights of Youku and Tudou Shareholders

   
228
 

Comparison of Rights of Youku and Tudou American Depositary Share Holders

    238  

LIMITATIONS ON ENFORCEMENT OF U.S. LAWS

   
248
 

LEGAL MATTERS

   
250
 

EXPERTS

   
251
 

WHERE YOU CAN FIND MORE INFORMATION

   
252
 

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

   
253
 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF TUDOU HOLDINGS LIMITED

   
F-1
 

APPENDIX A: MERGER AGREEMENT

   
A-1
 

APPENDIX B: THE VOTING AGREEMENTS

   
B-1
 

APPENDIX C: OPINION OF ALLEN & COMPANY LLC

   
C-1
 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE ANNUAL GENERAL
MEETINGS OF YOUKU AND TUDOU

        The following are some questions that you may have regarding the Merger, Youku AGM and/or Tudou AGM and brief answers to those questions. Youku and Tudou urge you to read carefully the entire joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Merger, Youku AGM and Tudou AGM. Additional important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus. Please see "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively.

Q:
What is this document?

A:
Youku has agreed to acquire all of the outstanding Tudou shares and Tudou ADSs pursuant to the terms of the Merger Agreement and the Plan of Merger that are described in this joint proxy statement/prospectus. A copy of the Merger Agreement is attached to this joint proxy statement/prospectus as Appendix A, and the form of the Plan of Merger is attached as Annex A to the Merger Agreement. In order to complete the Merger, Youku shareholders must vote to authorize and approve the Share Issuance, and Tudou shareholders must vote to authorize and approve the Merger Agreement, the Plan of Merger and the Merger. Youku and Tudou are holding their respective annual general meetings of shareholders to obtain these required shareholder approvals. This joint proxy statement/prospectus contains important information about Youku, Tudou, the Merger, the Youku AGM, the Tudou AGM and other background information so that you can make an informed investment decision, and you should read this information carefully.

    This joint proxy statement/prospectus is (1) a proxy statement for Youku under Cayman Islands law because the Youku Board is soliciting proxies from Youku shareholders, (2) a proxy statement for Tudou under Cayman Islands law because the Tudou Board is soliciting proxies from Tudou shareholders, and (3) a prospectus of Youku with respect to the Youku shares to be issued to Tudou shareholders and the Youku ADSs to be issued to Tudou ADS holders in the Merger pursuant to the Merger Agreement.

Q:
Why did I receive the proxy card?

A:
You received a proxy card and were directed to this document because (1) you owned Youku shares as of the Youku share record date or Youku ADSs as of the Youku ADS record date and/or (2) you owned Tudou shares as of the Tudou share record date or Tudou ADSs as of the Tudou ADS record date.

    If you are a Youku shareholder, the proxy card for the Youku AGM which was mailed to you allows you to vote your Youku shares without attending the Youku AGM in person, and if you are a Youku ADS holder, the ADS Voting instruction card which was mailed to you allows you to vote your Youku ADSs without needing to convert your Youku ADSs into Youku shares and attending the Youku AGM in person.

    If you are a Tudou shareholder, the proxy card for the Tudou AGM which was mailed to you allows you to vote your Tudou shares without attending the Tudou AGM in person, and if you are a Tudou ADS holder, the ADS Voting instruction card which was mailed to you allows you to vote your Tudou ADSs without needing to convert your Tudou ADSs into Tudou shares and attending the Tudou AGM in person.

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Questions and Answers Relating to the Merger

Q:
What is the Merger?

A:
Once the closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will merge with and into Tudou, with Tudou continuing as the surviving company after the Merger and as a wholly-owned subsidiary of Youku. As a result of the Merger, the Tudou ADSs will no longer be listed on the NASDAQ, Tudou will cease to be a publicly-traded company, the Tudou ADSs and the underlying Tudou shares will be deregistered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Tudou ADS program will terminate.

Q:
What will a holder of Tudou shares or Tudou ADSs receive in the Merger?

A:
As described in more detail under "The Merger Agreement and Plan of Merger—Merger Consideration," at the effective time of the Merger, (1) each outstanding Tudou share will be converted into the right to receive 7.177 Youku Class A shares, and (2) each outstanding Tudou ADS will be converted into the right to receive 1.595 Youku ADS; provided that the Excluded Tudou Shares shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefor, and the Dissenter Shares will be cancelled for the appraised or agreed value under the Cayman Companies Law.

    If Tudou shareholders validly exercise and have not effectively withdrawn or lost their appraisal rights under Section 238 of the Cayman Companies Law with respect to the Merger, such Tudou shareholders would not receive the Merger Consideration as set forth in the Merger Agreement in the event that the Merger is consummated, and would instead receive the value of each Tudou share appraised or agreed pursuant to the Cayman Companies Law. For more information on appraisal rights, please see the question "Am I entitled to appraisal rights?" below and its answer. Youku shareholders and ADS holders are not entitled to appraisal rights.

Q:
If the Merger is completed, will the Youku ADSs to be delivered under the Merger Agreement be "listed" for trading?

A:
Yes. Youku ADSs are listed on the NYSE under the symbol "YOKU." It is a condition to completion of the Merger that the Youku ADSs to be delivered to Tudou ADS holders in connection with the Merger be approved for listing on the NYSE, subject to official notice of issuance.

Q:
When do you expect the Merger to be completed?

A:
Youku and Tudou are working toward completing the Merger as quickly as possible and currently expect the Merger to close in the third quarter of 2012. In order to complete the Merger, Youku must obtain shareholder authorization and approval of the Share Issuance at the Youku AGM, Tudou must obtain shareholder authorization and approval of the Merger Agreement, the Plan of Merger and the Merger at the Tudou AGM, and the other closing conditions under the Merger Agreement must be satisfied or waived in accordance with the terms of the Merger Agreement.

Q:
Are there any risks in the Merger that I should consider?

A:
Yes. There are risks associated with all business combinations, including the Merger. These risks are discussed in more detail in the section entitled "Risk Factors" beginning on page 53.

Q:
What happens if the Merger is not completed?

A:
If the Merger is not completed for any reason, including but not limited to Tudou shareholders not authorizing and approving the Merger Agreement, the Plan of Merger and the Merger or Youku

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    shareholders not authorizing and approving the Share Issuance, then Tudou shareholders and ADS holders will not receive any payment for their respective Tudou shares and Tudou ADSs pursuant to the Merger Agreement nor will any holders of Tudou share options receive Youku share options pursuant to the Merger Agreement. In addition, Tudou will remain a publicly traded company. The Tudou ADSs will continue to be listed and traded on the NASDAQ, provided that Tudou continues to meet the NASDAQ's listing requirements. In addition, Tudou will remain subject to SEC reporting obligations. Therefore, Tudou shareholders and ADS holders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of Tudou shares and Tudou ADSs.

    Under specified circumstances in which the Merger Agreement is terminated, Tudou may be required to pay Youku a termination fee of US$100.0 million, which is the sole and exclusive remedy of Youku related parties against Tudou related parties for any loss or damage incurred as a result of any matters forming the basis for termination of the Merger Agreement. Under specified circumstances in which the Merger Agreement is terminated, Youku may be required to pay Tudou a termination fee of US$100.0 million. In the event that the Merger Agreement is terminated by Youku or Tudou due to Youku's shareholders not having authorized and approved the Share Issuance, Youku may be required to pay Tudou a termination fee of US$10.0 million. Tudou's receipt of either the US$100.0 million termination fee or the US$10.0 million termination fee, as applicable, is the sole and exclusive remedy of Tudou related parties against Youku related parties for any loss or damage incurred as a result of any matters forming the basis for termination of the Merger Agreement. For more information, see "The Merger Agreement and Plan of Merger—Termination Fee" beginning on page 151.

Q:
Can the value of the Merger Consideration to be received by holders of Tudou shares or Tudou ADSs change between now and the time the Merger is completed?

A:
The value of the Per Share Merger Consideration to be delivered to Tudou shareholders and the Per ADS Merger Consideration to be delivered to Tudou ADS holders, respectively, under the Merger Agreement will fluctuate based on the trading price for Youku ADSs on the NYSE. Regardless of the trading price of Youku's ADSs on the NYSE on the effective date of the Merger, Tudou shareholders will receive 7.177 Youku Class A shares for each Tudou share that they own and Tudou ADS holders will receive 1.595 Youku ADS for each Tudou ADS that they own as of the effective date of the Merger. The market value of the Youku Class A shares and Youku ADSs that Tudou shareholders and Tudou ADS holders will respectively receive in the Merger will increase or decrease as the trading price of Youku ADSs increases or decreases, and may be different at the time the Merger is completed than it was at the time the Merger Agreement was signed or will be at the time of the Tudou AGM or the time of the Youku AGM. Please see the section headed "Risk Factors" for more information on the risks involved in investing in Youku shares and Youku ADSs.

    As of April 23, 2012, the closing price of Youku ADSs on the NYSE was US$21.82 per ADS. Tudou shareholders are urged to obtain current trading prices for Youku ADSs on the website of the NYSE at http://www.nyse.com/ before voting. This website is not incorporated by reference in this joint proxy statement/prospectus.

Q:
What are the material tax consequences of the Merger to Tudou shareholders and Tudou ADS holders?

A:
Please see "The Merger—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 125 for a summary of the material U.S. federal income tax consequences of the Merger, "The Merger—Material PRC Income Tax Consequences of the Merger" beginning on page 129 for a summary of the material PRC income tax consequences of the Merger, and "The

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    Merger—Material Cayman Islands Tax Consequences of the Merger" beginning on page 130 for a summary of the material Cayman Islands tax consequences of the Merger. You are urged to consult with your own tax advisor for a full understanding of how the Merger will affect your U.S. federal, state, local, foreign and other taxes.

Q:
How will Tudou's share options be treated in the Merger?

A:
Each Tudou share option that is outstanding immediately prior to the effective time, whether vested or unvested, shall, at the effective time of the Merger, be assumed by Youku and be replaced by Youku with a Youku share option. Each such Youku share option shall be exercisable for that number of whole Youku Class A shares (rounded down to the nearest whole share) equal to the product of (x) the total number of Tudou shares subject to such Tudou share option and (y) 7.177, at an exercise price per Youku Class A share (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (x) the exercise price per share of the Tudou share option by (y) 7.177. Each such Youku share option shall continue to have, and shall be subject to, the same terms and conditions as applied to the Tudou share option immediately prior to the effective time (but taking into account any changes thereto provided for in the Tudou share incentive plan, any award agreement, or any other contract or agreement, including by reason of the Merger Agreement or the transactions contemplated thereby). In addition, Tudou may consider the immediate vesting upon the closing of the Merger of the Tudou share options held by certain directors and officers of Tudou, including Mr. Gary Wei Wang, chairman of the Tudou Board and Tudou's chief executive officer, in which case such Tudou share options shall become fully vested and exercisable upon the closing of the Merger.

    For more information on the treatment of Tudou share options in the Merger, see "The Merger Agreement and Plan of Merger—Treatment of Tudou Share Options."

Q:
After the Merger is completed, how will I receive the Merger Consideration for my Tudou shares?

A:
Within five business days after the effective time of the Merger, an exchange agent appointed by Youku (subjet to Tudou's prior approval) will mail to each registered holder of the Tudou shares (other than the Tudou depositary and holders of Excluded Tudou Shares and Dissenter Shares) (1) a form of letter of transmittal specifying how the delivery of the Merger Consideration to registered holders of the Tudou shares will be effected and (2) instructions for effecting the surrender of share certificates in exchange for the applicable Merger Consideration. Upon surrender of a share certificate or a declaration of loss or non-receipt, each registered holder of Tudou shares will receive the Per Share Merger Consideration for each Tudou share cancelled multipled by the number of Tudou shares held by such holder.

Q:
After the Merger is completed, how will I receive the Merger Consideration for my Tudou ADSs?

A:
Within five business days after the effective time of the Merger, the surviving company and the exchange agent will mail to the Tudou depositary (1) a form of letter of transmittal specifying how the delivery of the Merger Consideration to the Tudou depositary will be effected and (2) instructions for effecting the surrender of all certificates representing shares in the form of Tudou ADSs. The Tudou depositary will be entitled to receive the Per ADS Merger Consideration, without interest, for each Tudou ADS that has been issued (other than those Tudou ADSs issued to the Tudou depositary and reserved for future grants under the Tudou share incentive plan) (the "Aggregate ADS Payment"), provided that the Tudou depositary will be required to surrender such certificates it holds to the exchange agent, together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and the certificates so surrendered will forthwith be cancelled.

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    Within five business days following the payment of the Aggregate ADS Payment, the surviving company and the exchange agent will cause the Tudou depositary to mail to each registered holder of Tudou ADSs (other than holders of Excluded Tudou Shares) (1) a form of letter of transmittal specifying how the delivery of the Merger Consideration to the registered holders of the Tudou ADSs will be effected and (2) instructions for effecting the surrender of ADRs evidencing Tudou ADSs. Each holder registered on the ADS register at the effective time shall be entitled to receive the Per ADS Merger Consideration for each Tudou ADS multiplied by the number of Tudou ADSs held by such holder, provided that each holder of an ADR shall be required to surrender such ADR to the Tudou depositary together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and the ADRs so surrendered shall forthwith be cancelled pursuant to the deposit agreement, dated as of August 16, 2011 (the "Tudou Deposit Agreement"), by and among Tudou, The Bank of New York Mellon (the "Tudou depositary"), and all holders and beneficial owners of Tudou ADSs issued thereunder. Each ADR in respect of such cancelled Tudou ADS shall be deemed at any time after the effective time to represent only the right to receive the Per ADS Merger Consideration. The Tudou Deposit Agreement provides that in the event of the cancellation of the Tudou ADSs the holder thereof will pay to the Tudou depositary a cancellation fee of up to 5¢ per Tudou ADS canceled, and the registered holders of Tudou ADSs shall pay the ADS cancellation fee for each Tudou ADS that Youku acquires from him or her in the Merger

    If your Tudou ADSs are held in "street name" by your broker, bank or other nominee, you will not be required to take any action to receive the Per ADS Merger Consideration as the Tudou depositary will arrange for the surrender of the Tudou ADSs and the remittance of the Per ADS Merger Consideration with The Depository Trust Company (the clearance and settlement system for the Tudou ADSs) for distribution to your broker, bank or other nominee on your behalf. If you have any questions concerning the receipt of the Per ADS Merger Consideration, please contact your broker, bank or other nominee.

Q:
When will I receive the Merger Consideration for my Tudou shares or Tudou ADSs?

A:
Assuming the Merger is completed, registered holders of Tudou shares will receive the Per Share Merger Consideration as soon as practicable following their compliance with the instructions set forth in the letter of transmittal received from the exchange agent, including the surrender of share certificates.

    Assuming the Merger is completed, registered holders of Tudou ADSs will receive the Per ADS Merger Consideration as soon as practicable following their compliance with the instructions set forth in the letter of transmittal received from the Tudou depositary, including the surrender of ADRs evidencing Tudou ADSs.

Q:
Will I receive fractional interests in Youku Class A shares or Youku ADSs for my Tudou shares or Tudou ADSs?

A:
No fractional Youku Class A shares or Youku ADSs will be issued as Merger Consideration. The exchange agent will receive Youku Class A shares and the Tudou depositary will receive Youku ADS that are not used for exchange in the Merger because of the existence of fractional Youku Class A shares or Youku ADSs, and the exchange agent or the Tudou depositary will sell such securities on behalf of the holders of fractional Youku ADSs on the NYSE and pass on the proceeds due and payable to such holders of the Tudou ADSs in cash.

    If you are a beneficial owner of Tudou ADSs and your Tudou ADSs are held in "street name" by a broker, bank or other nominee, you should consult with your broker, bank or other nominee as to whether or not you may receive fractional interests in Youku ADSs.

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Q:
Will I have to pay brokerage commissions or depositary fees for my Tudou shares or Tudou ADSs?

A:
You will not have to pay brokerage commissions as a result of the exchange of your Tudou shares for Youku Class A shares in the Merger if your Tudou shares are registered in your name in the Tudou share register. The Tudou Deposit Agreement provides that in the event of the cancellation of the Tudou ADSs the holder thereof will pay to the Tudou depositary a cancellation fee of up to 5¢ per Tudou ADS canceled, and the registered holders of Tudou ADSs shall pay such ADS cancellation fee for each Tudou ADS that Youku acquires from him or her in the Merger. If your Tudou ADSs are held through a bank, broker or other nominee, you should consult with them as to whether or not they charge any transaction fee or service charges in connection with the Merger.

Q:
What is an American depositary share (ADS) and American depositary receipt (ADR)?

A:
An American depositary share ("ADS") is an ownership interest in the securities of a non-U.S. company deposited at a custodian bank, as agent of the depositary. ADS holders hold their ADSs either directly or indirectly through a broker or other financial institution. If you hold ADSs directly, either represented by ADSs in book-entry form on the depositary's direct registration system or represented by American depositary receipts ("ADRs") that you hold in certificated form, you are an ADR holder. Citibank, N.A. is the depositary of Youku's ADS program, and the Bank of New York Mellon is the depositary of Tudou's ADS program.

    Each Youku ADS represents 18 Youku Class A shares and each Tudou ADS represents four Tudou Class B shares. For a comparison of the material differences between the rights of Tudou ADS holders and the rights of Youku ADS holders under the respective deposit agreement, please see "Comparison of Rights of Holders of Youku Securities and Tudou Securities—Comparison of Rights of Youku and Tudou American Depositary Share Holders" beginning on page 238.


Questions and Answers Relating to the Youku AGM

Q:
When and where will the Youku AGM be held?

A:
The Youku AGM will take place on        , 2012, beginning at        Hong Kong time at                  .

Q:
What matters will be voted on at the Youku AGM?

A:
Youku shareholders will be asked to consider and vote on the following matters:

as an ordinary resolution to be approved by the holders of Youku shares representing a majority of the aggregate voting power of Youku and by the holders of a majority of the total outstanding Youku Class A shares, to authorize and approve the Share Issuance that constitutes the consideration for the Merger pursuant to the Merger Agreement;

as a special resolution, to authorize and approve the Name Change of Youku's legal name from "Youku Inc." to "Youku Tudou Inc." upon the effectiveness of the Merger; and

as an ordinary resolution, that in the event there are insufficient proxies received at the time of the Youku AGM to authorize and approve the Share Issuance and the Name Change proposed at the Youku AGM, the chairman of the Youku AGM be instructed to adjourn the Youku AGM in order to allow Youku to solicit additional proxies in favor of the authorization and approval of the Share Issuance and the Name Change.

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Q:
What vote of Youku shareholders is required to approve the Share Issuance and the Name Change?

A:
The Share Issuance cannot be completed unless it is authorized and approved by a resolution passed by an affirmative vote by holders of Youku shares representing a majority of the aggregate voting power and an affirmative vote by holders of a majority of the total outstanding Youku Class A shares, in each case, at a shareholders meeting of Youku. The Name Change cannot be completed unless it is authorized and approved by a special resolution passed by an affirmative vote of a majority of at least two-thirds of such shareholders of Youku as, being entitled to do so, vote in person or by proxy as a single class at a shareholders meeting of Youku.

    As an inducement for Tudou to enter into the Merger Agreement, certain principal shareholders of Youku entered into voting agreements to vote all Youku shares and Youku ADSs beneficially owned by them in favor of, among other things, the resolution to authorize and approve the Share Issuance. As of April 17, 2012, an aggregate of 409,581,285 Youku Class A shares and 645,023,149 Youku Class B shares, constituting approximately 50.9% of the total outstanding Youku shares, approximately 69.1% of the aggregate voting power of Youku shares and 29.0% of the aggregate voting power of Youku Class A shares, are subject to these voting agreements. Please see "The Voting Agreement—Voting Agreements between Tudou and Certain Youku Shareholders" for more information.

    In addition, as of April 17, 2012, excluding Youku share options granted to them, Youku directors and executive officers who are not subject to the voting agreements as a group beneficially owned an aggregate of 18,250,000 Youku Class B ordinary shares, constituting approximately 1.6% of the total outstanding Youku shares and approximately 0.9% of the aggregate voting power of Youku shares. They did not own any Youku Class A shares. Youku expects that the directors and executive officers of Youku not subject to the Tudou Voting Agreement will vote all of the Youku shares they beneficially own in favor of the resolutions to authorize and approve the Share Issuance and Name Change because they believe that the Share Issuance and the Name Change are in the best interests of Youku. None of the directors or executive officers of Youku has made a recommendation with respect to the proposed transaction other than as set forth in this joint proxy statement/prospectus.

Q:
Who is entitled to vote at the Youku AGM?

A:
The Youku share record date is            , 2012 (New York City time) and the Youku ADS record date is            , 2012 (New York City time). Holders of Youku shares on the Youku share record date are entitled to vote at the Youku AGM. Holders of Youku shares may appoint a proxy holder to vote on their behalf. Holders of Youku ADSs on the Youku ADS record date may instruct the Youku depositary how to vote the Youku shares underlying their ADSs. Shareholders entered in the register of members of Youku at the close of business on             , 2012 (New York City time) will receive the proxy card directly from Youku, and Youku ADS holders will receive the voting instruction card from the Youku depositary.

Q:
Who is entitled to participate in the Youku AGM?

A:
Only Youku shareholders registered in the register of members of Youku as of the Youku share record date or their proxy holders are entitled to participate in the Youku AGM or any adjournment thereof. Youku ADS holders themselves may not participate in the Youku AGM. Youku ADS holders who wish to attend the Youku AGM must surrender their Youku ADSs to the Youku depository, pay the Youku depository fees required for such surrender and provide instruction for the registration of the corresponding Youku shares prior to            , 2012, and become registered as a Youku shareholder in Youku's register of members prior to            , 2012, the Youku share record date.

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Q:
What constitutes a quorum for the Youku AGM?

A:
At least one Youku shareholder holding not less than an aggregate of one-third of all voting share capital of Youku in issue present in person or by proxy and entitled to vote constitutes a quorum. In addition, the quorum for meetings of the holders of Youku Class A shares requires at least one holder of Youku Class A shares holding or representing by proxy at least one-third of the issued Youku Class A shares that are entitled to vote on the Youku share record date.

Q:
How do I vote if my Youku shares are registered in my name?

A:
If Youku shares are registered in your name (that is, you do not hold ADSs) as of the Youku share record date, you should simply indicate on your proxy card how you want to vote, sign and date the proxy card, and mail the proxy card in the return envelope as soon as possible but in any event at least 48 hours before the time of the Youku AGM so that your Youku shares will be represented and may be voted at the Youku AGM.

    Alternatively, you can attend the Youku AGM and vote in person. If you decide to sign and send in your proxy card, and do not indicate how you want to vote, the Youku shares represented by your proxy will be voted FOR the resolution to authorize and approve the Share Issuance and Name Change, and FOR the resolution that, in the event that there are insufficient proxies received at the time of the Youku AGM to authorize and approve the Share Issuance and the Name Change, the chairman of the Youku AGM be instructed to adjourn the Youku AGM in order to allow Youku to solicit additional proxies in favor of the approval of the Share Issuance and Name Change, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Youku shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines. If your Youku shares are held by your broker, bank or other nominee, please see below for additional information.

Q:
How do I vote if I hold Youku ADSs?

A:
Voting at the Youku AGM will be by poll. If you own Youku ADSs as of the close of business on            , 2012 (New York City time), you cannot attend or vote at the Youku AGM directly, but you may instruct the Youku depositary (as the holder of the Youku shares underlying your ADSs) how to vote the shares underlying your Youku ADSs by completing and signing the Youku ADS voting instruction card and returning it in accordance with the instructions printed on it. The Youku depositary must receive the voting instruction card no later than              a.m. (New York City time) on            , 2012. The Youku depositary shall endeavor, in so far as practicable, to vote or cause to be voted the shares represented by your Youku ADSs in accordance with your voting instructions. If the Youku depositary timely receives valid voting instructions from a Youku ADS holder which fails to specify the manner in which the Youku depositary is to vote the shares represented by Youku ADSs held by such Youku ADS holder, such Youku ADS holder will be deemed to have instructed the Youku depositary to vote in favor of the items set forth in the voting instructions.

    Alternatively, you may vote at the Youku AGM if you surrender your Youku ADSs prior to            , 2012 (New York City time), the Youku ADS record date, and become a holder of Youku shares by the close of business on            , 2012 (New York City time), the Youku share record date. If you hold your Youku ADSs through a financial intermediary such as a broker, you must rely on the procedures of the financial intermediary through which you hold your Youku ADSs if you wish to vote. If your Youku ADSs are held by your broker, bank or other nominee, see below. If you wish to surrender your Youku ADSs, you need to make arrangements to deliver your Youku ADSs to the Youku depositary for cancellation prior to the close of business in New York City on            , 2012, the Youku ADS record date, together with (1) delivery instructions for the corresponding Youku shares (name and address of person who will be the registered holder of

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    Youku shares) and (2) payment of the ADS cancellation fees (5¢ per Youku ADS to be cancelled) and related expenses and taxes (such as stamp taxes and stock transfer taxes). If you hold your Youku ADSs in a brokerage, bank or nominee account, please contact your broker, bank or nominee to find out what actions you need to take to instruct the broker, bank or nominee to cancel the Youku ADSs on your behalf.

    If you request the cancellation of your Youku ADSs between the Youku ADS record date and the Youku share record date, you will be asked to certify that (1) you were a holder of the Youku ADSs being cancelled as of the Youku ADS record date and you have not given, and will not give, directly or indirectly, voting instructions to the Youku depositary as to the Youku ADSs presented for cancellation, or (2) you were not a holder of the Youku ADSs being cancelled as of the Youku ADS record date and you will not vote the Youku Class A shares at the Youku AGM.

    In the event that the Youku depositary receives voting instructions from holders of Youku ADSs that exceed the number of corresponding Youku Class A shares held on deposit as of the Youku share record date, the Youku depositary will prorate the voting instructions received and vote the Youku Class A shares held as of the Youku share record date in accordance with such prorated voting instructions.

Q:
What will happen if I abstain from voting or fail to vote at the Youku AGM in person or by proxy?

A:
Youku shareholders who abstain from voting or who fail to cast their vote in person or by proxy will not have their votes counted. Youku ADS holders who abstain from voting or who fail to provide specific voting instructions to Citibank, N.A. (the "Youku depositary") by             a.m. (New York City time) on            , 2012 will be deemed to have instructed the Youku depositary under the deposit agreement, dated as of December 8, 2010 (the "Youku Deposit Agreement"), among Youku, the Youku depositary and all holders from time to time of Youku ADSs, to give a discretionary proxy to a person designated by Youku (the "Youku Designee") under the Youku Deposit Agreement, unless Youku informs the Youku depositary that (1) Youku does not wish such discretionary proxy to be given, (2) substantial opposition exists in respect of the contemplated Share Issuance and the Name Change, or (3) the rights of holders of Youku shares may be materially adversely affected by the contemplated Share Issuance and the Name Change. It is Youku's intention that the Youku Designee vote all such unvoted Youku Class A shares FOR the resolutions to authorize and approve the Share Issuance and the Name Change and FOR any resolution to adjourn the Youku AGM.

Q:
If my Youku ADSs are held in a brokerage account, will my broker vote my Youku ADSs on my behalf?

A:
It is important that you promptly follow the directions provided by your broker, bank or other nominee regarding how to instruct it to vote your Youku ADSs. If you timely provide your broker, bank or other nominee with voting instructions, they will vote the Youku Class A shares underlying your Youku ADSs on your behalf based on such voting instructions. If you do not timely instruct your broker, bank or other nominee how to vote the Youku Class A shares underlying your Youku ADSs, you will be deemed to have instructed the Youku depositary under the Youku Deposit Agreement to give a discretionary proxy to the Youku Designee. It is Youku's intention that the Youku Designee vote all such unvoted Youku Class A shares FOR the resolutions to authorize and approve the Share Issuance and the Name Change and FOR any resolution to adjourn the Youku AGM.

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Q:
Can I change my vote for the Youku AGM?

A:
If your Youku shares are registered in your name, you may change your vote in one of three ways:

first, you may revoke a proxy by written notice of revocation given to the chairman of the Youku AGM before the Youku AGM commences. Any written notice revoking a proxy should be sent to Youku Inc., 11/F, SinoSteel Plaza, 8 Haidian Street, Haidian District, Beijing 100080, People's Republic of China;

second, you may complete, date and submit a new proxy card bearing a later date than the proxy card sought to be revoked to Youku to ensure that it will be received by Youku no later than             a.m. on        , 2012 (New York City Time) prior to the Youku AGM; or

third, you may attend the Youku AGM and vote in person. Attendance, by itself, will not revoke a proxy. It will only be revoked if the shareholder actually votes at the Youku AGM.

    Holders of Youku ADSs may revoke their voting instructions by notification to the Youku depositary in writing at any time prior to             a.m. New York City time on            , 2012. A holder of Youku ADSs can do this in one of two ways:

    first, a holder of Youku ADSs can revoke its voting instructions by written notice of revocation timely delivered to the Youku depositary; or

    second, a holder of Youku ADSs can complete, date and submit a new ADS voting instruction card to the Youku depositary bearing a later date than the ADS voting instruction card sought to be revoked.

    If you hold your Youku ADSs through a broker, bank or nominee and you have instructed your broker, bank or nominee to give ADS voting instructions to the Youku depositary, you must follow the directions of your broker, bank or nominee to change those instructions.

Q:
What should I do if I receive more than one set of voting materials for the Youku AGM?

A:
You may receive more than one set of voting materials, including multiple copies of the joint proxy statement or multiple proxy cards or Youku ADS voting instruction cards. For example, if you hold your Youku ADSs in more than one brokerage account, you will receive a separate ADS voting instruction card for each brokerage account in which you hold ADSs. If you are a Youku shareholder of record and/or a Youku ADS holder and your Youku shares and/or ADSs, respectively, are registered in more than one name, you will receive more than one proxy card. Please submit each proxy card that you receive.

Q:
Will any proxy solicitor be used in connection with the Youku AGM?

A:
Youku will ask banks, brokers and other custodians, nominees and fiduciaries to forward Youku's proxy solicitation materials to the beneficial owners of Youku shares or Youku ADSs held of record by such nominee holders. Youku will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners and in obtaining voting instructions from those owners. In addition, proxies may be solicited by mail, in person, by telephone, by Internet or by facsimile by certain of Youku's officers, directors and employees. These persons will receive no additional compensation for solicitation of proxies but may be reimbursed for reasonable out-of-pocket expenses. Youku will pay all expenses of filing, printing and mailing this joint proxy statement/prospectus.

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Q:
Do any of Youku's directors or executive officers have interests with respect to the matters submitted for Youku shareholders' vote that may differ from, or be in addition to, those of other Youku shareholders generally?

A:
Youku's directors and executive officers do not have agreements or arrangements that provide them with interests with respect to the Share Issuance or the Name Change that may differ from, or be in addition to, the interests of other Youku shareholders generally.

Q:
Does the Youku Board recommend the authorization and approval of the Share Issuance and the Name Change?

A:
Yes. The Youku Board has approved and adopted the Merger Agreement and recommends that you vote FOR the resolutions to authorize and approve the Share Issuance and the Name Change and FOR the resolution that, in the event that there are insufficient proxies received at the time of the Youku AGM to authorize and approve the Share Issuance and the Name Change proposed at the Youku AGM, the chairman of the Youku AGM be instructed to adjourn the Youku AGM in order to allow Youku to solicit additional proxies in favor of the authorization and approval of the Share Issuance and the Name Change.

    For additional information regarding the factors and reasons considered by the Youku Board in approving the Merger, please see "The Merger—Background of the Merger" beginning on page 97, "The Merger—Reasons for the Merger and Recommendation of the Youku Board" beginning on page 102.


Questions and Answers Relating to the Tudou AGM

Q:
When and where will the Tudou AGM be held?

A:
The Tudou AGM will take place on                , 2012, beginning at          local time at          .

Q:
What matters will be voted on at the Tudou AGM?

A:
Tudou shareholders will be asked to consider and vote on the following matters:

as a special resolution, to authorize and approve the Merger Agreement, the Plan of Merger and the Merger;

as an ordinary resolution, to approve that Messrs. Gary Wei Wang, Hany Nada, David M. Hand, Ted Tak-Tai Lee and Conor Chia-hung Yang (the "Tudou Directors") be re-elected as the directors of Tudou (the "Re-election of Tudou Directors"); and

as an ordinary resolution, that in the event that there are insufficient proxies received at the time of the Tudou AGM to authorize and approve the Merger Agreement, the Plan of Merger and the Merger or approve the Re-election of Tudou Directors, the chairman of the Tudou AGM be instructed to adjourn the Tudou AGM in order to allow Tudou to solicit additional proxies in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the approval of the Re-election of Tudou Directors.

Q:
What vote of Tudou shareholders is required to authorize and approve the Merger Agreement, the Plan of Merger and the Merger?

A:
In order for the Merger to be completed, the Merger Agreement, the Plan of Merger and the Merger must be authorized and approved by a special resolution of Tudou passed by an affirmative vote of a majority of at least two-thirds of such shareholders of Tudou as, being entitled to do so, vote in person or by proxy as a single class at the Tudou AGM.

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    As an inducement for Youku to enter into the Merger Agreement, certain principal shareholders of Tudou entered into voting agreements to vote all Tudou shares and Tudou ADSs beneficially owned by them in favor of the resolutions to approve and authorize the Merger Agreement, the Plan of Merger and the Merger. As of April 17, 2012, an aggregate of 64,977,879 Tudou shares, constituting approximately 55.8% of the total outstanding shares of Tudou and 65.3% of the voting power of Tudou, are subject to these voting agreements. Please see "The Voting Agreement—Voting Agreements between Youku and Certain Tudou Shareholders" for more information.

    As of April 17, 2012, excluding Tudou share options granted to them, all of Tudou directors and executive officers that beneficially owned Tudou shares were subject to the voting agreements described in the above paragraph.

Q:
What vote of Tudou shareholders is required to approve the Re-election of Tudou Directors?

A:
The Re-election of Tudou Directors must be approved by an ordinary resolution of Tudou passed by a majority of the votes cast by such shareholders of Tudou as, being entitled to do so, vote in person or by proxy as a single class at the Tudou AGM.

Q:
Who is entitled to vote at the Tudou AGM?

A:
The Tudou share record date is            , 2012 (New York City time) and the Tudou ADS record date is            , 2012 (New York City time). Holders of Tudou shares on the share record date are entitled to vote at the Tudou AGM. Holders of Tudou shares may appoint a proxy holder to vote on their behalf. Holders of Tudou ADSs may instruct the Tudou depositary how to vote the Tudou shares underlying their Tudou ADSs. Shareholders entered in the register of members of Tudou at the close of business on                , 2012 (New York City time) will receive the proxy card directly from Tudou, and Tudou ADS holders will receive the voting instruction card from the Tudou depositary.

Q:
Who is entitled to participate in the Tudou AGM?

A:
Only Tudou shareholders registered in the register of members of Tudou as of the Tudou share record date or their proxy holders are entitled to participate in the Tudou AGM or any adjournment thereof. Tudou ADS holders themselves may not participate in the Tudou AGM. Tudou ADS holders who wish to attend the Tudou AGM must surrender their Tudou ADSs to the Tudou depository, pay the Tudou depository fees required for such surrender and provide instruction for the registration of the corresponding Tudou shares prior to            , 2012, and become registered as a Tudou shareholder in Tudou's register of members prior to            , 2012, the Tudou share record date.

Q:
What constitutes a quorum for the Tudou AGM?

A:
Two or more shareholders on record holding not less than an aggregate of one-third of all voting share capital of Tudou in issue present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative or proxy and entitled to vote will constitute a quorum.

Q:
How do I vote if my Tudou shares are registered in my name?

A:
If Tudou shares are registered in your name (that is, you do not hold ADSs) as of the Tudou share record date, you should simply indicate on your proxy card how you want to vote, sign and date the proxy card, and mail the proxy card in the return envelope as soon as possible but in any event at least 48 hours before the time of the Tudou AGM so that your Tudou shares will be represented and may be voted at the Tudou AGM. Alternatively, you can attend the Tudou AGM and vote in

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    person. If you decide to sign and send in your proxy card, and do not indicate how you want to vote, the Tudou shares represented by your proxy will be voted (1) FOR the resolution to authorize and approve the Merger Agreement, the Plan of Merger and the Merger, (2) FOR the resolution to approve the Re-election of Tudou Directors, and (3) FOR the resolution that in the event that there are insufficient proxies received at the time of the Tudou AGM to authorize and approve the Merger Agreement, the Plan of Merger and the Merger or to approve the Re-election of Tudou Directors, the chairman of the Tudou AGM be instructed to adjourn the Tudou AGM in order to allow Tudou to solicit additional proxies in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the approval of the Re-election of Tudou Directors, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Tudou shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines. If your Tudou shares are held by your broker, bank or other nominee, please see below for additional information.

Q:
How do I vote if I hold Tudou ADSs?

A:
If you own Tudou ADSs as of the close of business on            , 2012 (New York City time), you cannot attend or vote at the Tudou AGM directly, but you may instruct the Tudou depositary (as the holder of the Tudou shares underlying your ADSs) how to vote the shares underlying your Tudou ADSs by completing and signing the Tudou ADS voting instruction card and returning it in accordance with the instructions printed on it. The Tudou depositary must receive the voting instruction card no later than           a.m. New York City time on             , 2012. The Tudou depositary shall endeavor, in so far as practicable, to vote or cause to be voted the shares represented by your Tudou ADSs in accordance with your voting instructions. If the Tudou depositary timely receives valid voting instructions from a Tudou ADS holder which fails to specify the manner in which the Tudou depositary is to vote the shares represented by Tudou ADSs held by such Tudou ADS holder, such Tudou ADS holder will be deemed to have instructed the Tudou depositary to vote in favor of the items set forth in the voting instructions.

    Alternatively, you may vote at the Tudou AGM if you surrender your Tudou ADSs prior to            , 2012 (New York City time), the Tudou ADS record date, and become a holder of Tudou shares by the close of business on            , 2012 (New York City time), the Tudou share record date. If you hold your Tudou ADSs through a financial intermediary such as a broker, you must rely on the procedures of the financial intermediary through which you hold your Tudou ADSs if you wish to vote. If your Tudou ADSs are held by your broker, bank or other nominee, see below. If you wish to surrender your Tudou ADSs, you need to make arrangements to deliver your Tudou ADSs to the Tudou depositary for cancellation prior to the close of business in New York City on            , 2012, the Tudou ADS record date, together with (1) delivery instructions for the corresponding Tudou shares (name and address of person who will be the registered holder of Tudou shares) and (2) payment of the ADS cancellation fees (up to 5¢ per Tudou ADS to be cancelled) and related expenses and taxes (such as stamp taxes and stock transfer taxes). If you hold your Tudou ADSs in a brokerage, bank or nominee account, please contact your broker, bank or nominee to find out what actions you need to take to instruct the broker, bank or nominee to cancel the Tudou ADSs on your behalf. Upon cancellation of the Tudou ADSs, the depositary bank will arrange for the principal Hong Kong office of The Hongkong and Shanghai Banking Corporation Limited, the custodian holding the Tudou shares, to transfer registration of the Tudou shares to you.

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Q:
What will happen if I abstain from voting or fail to vote at the Tudou AGM in person or by proxy?

A:
Tudou shareholders who abstain from voting or fail to cast their vote in person or by proxy will not have their votes counted. Tudou ADS holders who abstain from voting or who fail to provide specific voting instructions to the Tudou depositary by             a.m. (New York City time) on                , 2012 may, under the terms of the Tudou Deposit Agreement, be deemed to have instructed the Tudou depositary to give a discretionary proxy to a person designated by Tudou (the "Tudou Designee"). Unless Tudou notifies the Tudou depositary that this provision will not apply, the Tudou Designee will receive a proxy from the Tudou depositary and will vote all such uninstructed Tudou Class B shares FOR the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger, FOR the approval of the Re-election of Tudou Directors and FOR any adjournment of the Tudou AGM.

Q:
If my Tudou ADSs are held in a brokerage account, will my broker vote my Tudou ADSs on my behalf?

A:
It is important that you promptly follow the directions provided by your broker, bank or other nominee regarding how to instruct it to vote your Tudou ADSs. If you timely provide your broker, bank or other nominee with voting instructions, such entity will vote the Tudou Class B shares underlying your Tudou ADSs on your behalf based on such voting instructions. If you do not timely instruct your bank, broker or other nominee how to vote the Tudou Class B shares underlying your Tudou ADSs, you may, under the terms of Tudou Deposit Agreement, be deemed to have instructed the Tudou depositary to give a discretionary proxy to the Tudou Designee. Unless Tudou notifies the Tudou depositary that this provision will not apply, the Tudou Designee will receive a proxy from the Tudou depositary and will vote all such uninstructed Tudou Class B shares FOR the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger, FOR the approval of the Re-election of Tudou Directors and FOR any adjournment of the Tudou AGM.

Q:
Can I change my vote for the Tudou AGM?

A:
If your Tudou shares are registered in your name, you may change your vote in one of three ways:

first, you may revoke a proxy by written notice of revocation given to the chairman of the Tudou AGM before the Tudou AGM commences. Any written notice revoking a proxy should be sent to Tudou Holdings Limited, Building No. 6, X2 Creative Park, 1238 Xietu Road, Xuhui District, Shanghai 200032, People's Republic of China;

second, you may complete, date and submit a new proxy card bearing a later date than the proxy card sought to be revoked to Tudou to ensure that it will be received by Youku no later than             a.m. on                        , 2012 (New York City Time) prior to the Tudou AGM; or

third, you may attend the Tudou AGM and vote in person. Attendance, by itself, will not revoke a proxy. It will only be revoked if the shareholder actually votes at the Tudou AGM.

    Holders of Tudou ADSs may revoke their voting instructions by notification to the Tudou depositary in writing at any time prior to             a.m. New York City time on                        , 2012. A holder of Tudou ADSs can do this in one of two ways:

    first, a holder of Tudou ADSs can revoke its voting instructions by written notice of revocation timely delivered to the Tudou depositary; or

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    second, a holder of Tudou ADSs can complete, date and submit a new ADS voting instruction card to the Tudou depositary bearing a later date than the ADS voting instruction card sought to be revoked.

    If you hold your Tudou ADSs through a broker, bank or nominee and you have instructed your broker, bank or nominee to give ADS voting instructions to the Tudou depositary, you must follow the directions of your broker, bank or nominee to change those instructions.

Q:
What should I do if I receive more than one set of voting materials for Tudou AGM?

A:
You may receive more than one set of voting materials, including multiple copies of the joint proxy statement or multiple proxy cards or ADS voting instruction cards. For example, if you hold your Tudou ADSs in more than one brokerage account, you will receive a separate ADS voting instruction card for each brokerage account in which you hold ADSs. If you are a Tudou shareholder of record and/or a Tudou ADS holder and your Tudou shares and/or ADSs, respectively, are registered in more than one name, you will receive more than one proxy card. Please submit each proxy card that you receive.

Q:
If I hold certificated Tudou Shares or if I hold ADRs, should I send in my share certificates and/or ADRs now?

A:
No. Promptly after the Merger is completed, each Tudou shareholder of record as of the time of the Merger will be sent written instructions for exchanging their share certificates for the Per Share Merger Consideration. Please do not send your share certificates now. Similarly, you should not send the ADRs that represent your Tudou ADSs to the Tudou depositary at this time. Promptly after the Merger is completed, the Tudou depositary will call for the surrender of all Tudou ADRs for delivery of the Per ADS Merger Consideration. Tudou ADR owners will be receiving a notice from the Tudou depositary relating to the foregoing.

    All holders of uncertificated Tudou shares and Tudou ADSs held in book-form entry will automatically receive their Per Share Merger Consideration or Per ADS Merger Consideration as soon as practicable after the Merger is completed without any further action required on the part of such holders. An ADS cancellation fee payable to the Tudou depositary will be deducted from the registered ADS holders' account.

Q:
Am I entitled to appraisal rights as a Tudou shares or ADSs holder?

A:
Shareholders registered in Tudou's register of members as the holders of Tudou shares as of the Tudou share record date who dissent from the Merger will have the right to seek appraisal and payment of the fair value of their Tudou shares if the Merger is completed, but only if they deliver to Tudou, before the vote is taken on the resolution to authorize and approve the Merger Agreement, the Plan of Merger and the Merger, a written objection to the Merger and they subsequently comply with all procedures and requirements of Section 238 of the Cayman Companies Law for the exercise of appraisal rights. The fair value of your Tudou shares as determined under that statute could be more than, the same as, or less than the Per Share Merger Consideration you would receive pursuant to the Merger Agreement if you do not exercise appraisal rights with respect to your shares.

    Tudou ADS holders will not have the right to seek appraisal and payment of the fair value of the shares underlying their ADSs. The Tudou depositary will not attempt to perfect any appraisal rights with respect to any of the Tudou shares that it holds, even if an ADS holder requests it to do so. Tudou ADS holders wishing to exercise appraisal rights must surrender their ADSs to the Tudou depositary, pay the Tudou depositary's fees required for such surrender, provide instructions for the registration of the corresponding Tudou shares before             a.m. New York City time on            

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    , 2012 and become registered holders of Tudou shares by the close of business on                , 2012 (New York City time) the Tudou share record date. Thereafter, such former ADS holders must comply with the procedures and requirements for exercising dissenter and appraisal rights with respect to the Tudou shares under Section 238 of the Cayman Companies Law.

    We encourage you to read the information set forth in this joint proxy statement/prospectus carefully and to consult your own Cayman Islands legal counsel if you desire to exercise your appraisal rights. Please see "The Merger—Appraisal Rights" beginning on page 130 as well as "Appendix E—Section 238 of the Cayman Companies Law" to this joint proxy statement/prospectus for additional information.

Q:
If I own Tudou ADSs and seek to perfect appraisal rights, how do I convert my ADSs to Tudou shares, and when is the deadline for completing the conversion of Tudou ADSs to Tudou shares?

A:
If you own Tudou ADSs and wish to exercise appraisal rights, you must surrender your ADSs at the Tudou depositary's office at 101 Barclay Street, New York, New York 10286; Attention: ADR Division. Upon your payment of the Tudou ADS cancellation fee to the Tudou depositary and any other applicable expenses, taxes or charges, such as stamp taxes or stock transfer taxes or fees, the Tudou depositary will arrange for the principal Hong Kong office of The Hongkong and Shanghai Banking Corporation Limited, the custodian holding the Tudou shares, to transfer the Tudou shares and any other deposited securities underlying the ADSs to such ADS holder or a person designated by such ADS holder.

    The deadline for surrendering Tudou ADSs to the Tudou depositary for these purposes is the close of business on                , 2012 (New York City time).

    You must become a registered holder of your Tudou shares and lodge a written notice of objection to the plan of Merger with Tudou prior to the Tudou AGM.

Q:
Will any proxy solicitor be used in connection with the Tudou AGM?

A:
Tudou will ask banks, brokers and other custodians, nominees and fiduciaries to forward Tudou's proxy solicitation materials to the beneficial owners of Tudou shares or Tudou ADSs held of record by such nominee holders. Tudou will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners and in obtaining voting instructions from those owners. In addition, proxies may be solicited by mail, in person, by telephone, by Internet or by facsimile by certain of Tudou's officers, directors and employees. These persons will receive no additional compensation for solicitation of proxies but may be reimbursed for reasonable out-of-pocket expenses. Tudou will pay all expenses of filing, printing and mailing this joint proxy statement/prospectus.

Q:
Do any of Tudou's directors or executive officers have interests in the Merger that may differ from, or be in addition to, those of other Tudou shareholders generally?

A:
Some of Tudou's directors and executive officers have agreements and arrangements which may result in their having interests in the Merger that may be different from, or in addition to, the interests of Tudou's shareholders generally, including but not limited to treatment of Tudou share options in the Merger and board representation rights on the Youku Board for Mr. Gary Wei Wang, chairman of the Tudou Board and Tudou's chief executive officer, and an individual appointed by GGV II Delaware L.L.C., one of the principal shareholders of Tudou. The Tudou Board was aware of these agreements and arrangements during its deliberations of the merits of the Merger and in determining to recommend that Tudou shareholders vote to authorize and approve the Merger. Please see "The Merger—Interests of Tudou's Directors and Executive Officers in the Merger" beginning on page 122 for more information.

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Q:
Does the Tudou Board recommend the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the Re-election of the Tudou Directors?

A:
Yes. The Tudou Board has authorized and approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger and recommends that you vote:

FOR the special resolution to authorize and approve the Merger Agreement, the Plan of Merger and the Merger;

FOR the ordinary resolution to approve the Re-election of Tudou Directors; and

FOR the ordinary resolution that in the event that there are insufficient proxies received at the time of the Tudou AGM to authorize and approve the Merger Agreement, the Plan of Merger and the Merger or approve the Re-election of Tudou Directors, the chairman of the Tudou AGM be instructed to adjourn the Tudou AGM in order to allow Tudou to solicit additional proxies in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the approval of the Re-election of Tudou Directors.

    For additional information regarding the factors and reasons considered by the Tudou Board in approving the Merger, please see "The Merger—Background of the Merger" beginning on page 97, "The Merger—Reasons for the Merger and Recommendation of the Tudou Board" beginning on page 105.


Other Questions

Q:    What do I need to do now as a holder of Youku shares/ADSs and/or Tudou shares/ADSs?

A:
You are urged to carefully read this joint proxy statement/prospectus, including its appendices and the other documents referred to or incorporated by reference into this joint proxy statement/prospectus and to consider how the Merger affects you as a Youku shareholder/ADS holder and/or a Tudou shareholder/ADS holder. You may also want to review the documents referenced under "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively, and consult with your accounting, legal and tax advisors. Once you have considered all relevant information, you are encouraged to vote by proxy so that (1) your Youku shares and/or the Youku shares underlying your Youku ADSs are represented at the Youku AGM, and/or (2) the Tudou shares and/or the Tudou shares underlying your Tudou ADSs are represented at the Tudou AGM. You can vote your Youku shares and/or the Youku shares underlying your Youku ADSs by marking your choices on the Youku proxy card or the Youku ADS voting instruction card, respectively, and then signing, dating and mailing it in the return envelope. You can vote your Tudou shares and/or the Tudou shares underlying your Tudou ADSs by marking your choices on the Tudou proxy card or the Tudou ADS voting instruction card, respectively, and then signing, dating and mailing it in the return envelope.

Q:
Who can help answer my questions?

A:
If you have any further questions about the Merger or if you need copies of this joint proxy statement/prospectus or the proxy card, you can contact representatives from the investor relation departments of Youku and Tudou as follows:

    Ryan Cheung
    Corporate Finance Director
    Youku Inc.
    11/F, SinoSteel Plaza
    8 Haidian Street
    Haidian District

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    Beijing 100080
    People's Republic of China
    Tel: (+86 10) 5885-1881 x6090
    Email: ryan.cheung@youku.com

    Michael Fu
    Investor Relations Director
    Tudou Holdings Limited
    Building No. 6, X2 Creative Park,
    1238 Xietu Road, Xuhui District
    Shanghai 200032,
    People's Republic of China
    Tel: (+86 21) 5170-2375
    Email: mfu@tudou.com

Q:
Where can I find more information about the companies involved in the Merger?

A:
You can find more information about Youku, Tudou and Merger Sub in "Summary—The Companies" beginning on page 19 of this joint proxy statement/prospectus, and in the documents described under "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively.

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SUMMARY

        This summary, together with the section titled "Questions and Answers about the Merger and the Annual General Meetings of Youku and Tudou," summarizes the material information in this joint proxy statement/prospectus. However, it may not contain all of the information that may be important to your consideration of the proposed Merger. To understand the Merger fully and for a more complete description of the legal terms of the Merger, you should carefully read this entire joint proxy statement/prospectus and the other documents to which this joint proxy statement/prospectus refers, including the appendixes that are attached to this joint proxy statement/prospectus and incorporated by reference into this joint proxy statement/prospectus. Please see also "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively. Page references included parenthetically in this summary direct you to the more complete description found elsewhere in this joint proxy statement/prospectus.


The Companies

Youku Inc.

        Youku is the leading Internet television company in China and its Internet television platform enables users to search, view and share video content across multiple devices. Youku was incorporated under the laws of the Cayman Islands and carries out its operation through its subsidiaries and consolidated affiliated entities in China.

        For a description of Youku's operation and business in China, please see "Item 4. Information on the Company—A. History and Development of the Company" on page 31 of Youku's annual report on Form 20-F for the year ended December 31, 2011, as filed with the SEC on April 10, 2012 (the "Youku 2011 20-F") and incorporated by reference to the registration statement on Form F-4 of which this joint proxy statement/prospectus is a part.

        Youku principal executive offices are located at 11/F, SinoSteel Plaza, 8 Haidian Street, Beijing, 100080, People's Republic of China. Its telephone number at this address is +86 10 5885-1881. Youku's registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Youku also has three branches in Shanghai, Guangzhou and Xi'an, China and one representative office in Chengde, China. Youku's agent for service of process in the United States is Law Debenture Corporate Services Inc. located at 400 Madison Avenue, 4th Floor, New York, New York 10017.

        Youku's American depositary shares, each representing 18 Class A ordinary shares, par value US$0.00001 per share of Youku, are listed on the NYSE under the symbol "YOKU."


Tudou Holdings Limited

        Tudou has been conducting the business of online video sharing and advertising in China and provides an online platform for Chinese Internet users to upload, watch and share videos via the Internet. Tudou was incorporated under the laws of the Cayman Islands and carries out its operation through its subsidiaries and consolidated affiliated entities in China.

        Tudou's principal executive offices are located at Building No. 6, X2 Creative Park, 1238 Xietu Road, Xuhui District, Shanghai 200032, People's Republic of China. Its telephone number at this address is (+86 21) 5170-2355 and the fax number is (+86 21) 5170-2366. Tudou's registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

        Tudou's American depositary shares ("Tudou ADSs"), each representing four Class B ordinary shares, par value US$0.0001 per share of Tudou, are listed on the NASDAQ Global Select Market, or NASDAQ, under the symbol "TUDO."

 

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Two Merger Sub Inc.

        Two Merger Sub Inc., or Merger Sub, was incorporated on March 1, 2012 under the laws of the Cayman Islands as an exempted company with limited liability. Merger Sub is a direct and wholly owned subsidiary of Youku, which was formed solely for the purpose of effecting the Merger. Merger Sub has not conducted any business operations other than incidental to its formation and in connection with the transactions contemplated by the Merger Agreement.

        Merger Sub's business offices are located at 11/F, SinoSteel Plaza, 8 Haidian Street, Haidian District, Beijing 100080, People's Republic of China, and its telephone number is +86 10 5885-1881. Merger Sub's registered office in the Cayman Islands is located at the office of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman KYI-1104, Cayman Islands.


Risk Factors (page 53)

        An investment in Youku shares and Youku ADSs involves risks, some of which are related to the Merger. In considering the proposed Merger, you should carefully consider the information about these risks set forth under "Risk Factors" beginning on page 53, together with the other information included or incorporated by reference in this joint proxy statement/prospectus. These risks include, without limitation, the following:

    The market price of the Youku ADSs may decline following the completion of the Merger or during the period of time between the Tudou AGM and the dates on which Tudou shareholders and Tudou ADS holders actually receive Youku Class A shares and Youku ADSs pursuant to the Merger Agreement;

    Youku and Tudou may not achieve the expected benefits of the proposed Merger;

    Youku and Tudou will incur transaction and integration costs in connection with the Merger;

    Failure to timely complete the proposed Merger could disrupt Youku's and Tudou's business plans and operations; and

    The market price of the Youku ADSs after the Merger may be affected by factors different from those affecting the price of Tudou ADSs.


The Annual General Meeting of Youku Shareholders (page 88)

        Youku will hold the Youku AGM at                        , Hong Kong on                        , 2012, beginning at                        (Hong Kong time).

        The purposes of the Youku AGM are to consider and, if thought fit, to pass the following resolutions:

    as an ordinary resolution to be approved by the holders of Youku shares representing a majority of the aggregate voting power of Youku and by the holders of a majority of the total outstanding Youku Class A shares, to authorize and approve the Share Issuance that constitutes the considerations for the Merger pursuant to the Merger Agreement;

    as a special resolution, to authorize and approve the Name Change of Youku's legal name from "Youku Inc." to "Youku Tudou Inc." upon the effectiveness of the Merger; and

    as an ordinary resolution, that in the event there are insufficient proxies received at the time of the Youku AGM to authorize and approve the Share Issuance and the Name Change proposed at the Youku AGM, the chairman of the Youku AGM be instructed to adjourn the Youku AGM in order to allow Youku to solicit additional proxies in favor of the authorization and approval of the Share Issuance and the Name Change.

        After the closing of the Merger, the current total voting power of Youku Class B shares will be reduced significantly. Youku Class B shares are primarily held by shareholders affiliated with Youku's

 

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management. Youku is considering proposals to amend and restate Youku's currently effective memorandum and articles of association to reflect, among other things, a change to the voting power of each Youku Class B share from three votes to four votes on all matters subject to a vote at Youku's shareholders meetings, as well as certain other revisions to Article 6(c) of Youku's memorandum and articles of association. These proposals are subject to approval by Youku's board and shareholders.


Vote Required at the Youku AGM; Tudou Voting Agreements

        The Share Issuance must be authorized and approved by a resolution passed by an affirmative vote by holders of Youku shares representing a majority of the aggregate voting power and an affirmative vote by holders of a majority of the total outstanding Youku Class A shares, in each case, at a shareholders meeting of Youku. The Name Change must be authorized and approved by an affirmative vote of a majority of at least two-thirds of such shareholders of Youku as, being entitled to do so, vote in person or by proxy as a single class at a shareholders meeting of Youku. As of April 17, 2012, there were 2,072,617,783 Youku shares issued and outstanding and entitled to vote.

        As an inducement for Tudou to enter into the Merger Agreement, certain principal shareholders of Youku, including Victor Wing Cheung Koo, Brookside Capital Partners Fund, L.P., Maverick Fund USA, Ltd., Sutter Hill Ventures and certain of their affiliates (the "Youku Voting Shareholders"), entered into voting agreements with and in favor of Tudou on March 11, 2012 (the "Tudou Voting Agreements") contemporaneously with the execution and delivery of the Merger Agreement. As of April 17, 2012, an aggregate of 409,581,285 Youku Class A shares and 645,023,149 Youku Class B shares, constituting approximately 50.9% of the total outstanding Youku shares, approximately 69.1% of the aggregate voting power of Youku shares and 29.1% of the aggregate voting power of Youku Class A shares, are subject to the Tudou Voting Agreements. Under the Tudou Voting Agreements, the Youku Voting Shareholders have agreed, among other things, to vote all Youku shares and Youku ADSs beneficially owned by them in favor of the resolution to authorize and approve the Share Issuance and the Name Change. Please see "The Voting Agreement—Voting Agreements between Tudou and Certain Youku Shareholders" for more information.

        In addition, as of April 17, 2012, excluding Youku share options granted to them, Youku directors and executive officers who are not subject to the Tudou Voting Agreements as a group beneficially owned an aggregate of 18,250,000 Youku Class B ordinary shares, constituting approximately 1.6% of the total outstanding Youku shares and approximately 0.9% of the aggregate voting power of Youku shares. They did not own any Youku Class A shares. Youku currently expects that the directors and executive officers of Youku not subject to the Tudou Voting Agreement will vote all of the Youku shares they beneficially own in favor of the resolutions to authorize and approve the Share Issuance and Name Change because they believe that the Share Issuance and the Name Change are in the best interests of Youku. None of the directors or executive officers of Youku has made a recommendation with respect to the proposed transaction other than as set forth in this joint proxy statement/prospectus.

        Members of the Youku Board and Youku's executive officers do not have agreements and arrangements that provide them with interests in the Merger that may differ from, or be in addition to, the interests of other Youku shareholders.


Youku Shareholders and ADS Holders Entitled to Vote; Voting Material

        Only Youku shareholders entered in the register of members of Youku at the close of business on                        , 2012 (New York City time), the Youku share record date, will receive the proxy card directly from Youku. Youku shareholders registered in the register of members of Youku as of the Youku share record date or their proxy holders are entitled to vote and may participate in the Youku AGM or any adjournment thereof. Youku shareholders wanting to vote by proxy should simply indicate on their proxy card how they want to vote, sign and date the proxy card, and mail the proxy card in the return envelope as soon as possible but in any event at least 48 hours before the time of the Youku AGM.

 

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        Holders of Youku ADSs cannot attend or vote at the Youku AGM directly, but holders of Youku ADSs as of the close of business on                        , 2012 (New York City time), may instruct the Youku depositary how to vote the shares underlying the ADSs by completing and signing an ADS voting instruction card provided by the Youku depositary and returning it in accordance with the instructions printed on it. Youku depositary must receive the ADS voting instruction card no later than 10:00 a.m. New York City time on                        , 2012. The Youku depositary shall endeavor, in so far as practicable, to vote or cause to be voted the shares represented by Youku ADSs in accordance with your voting instructions. If banks, brokers or other nominee holders of Youku ADSs do not timely receive specific voting instructions from the beneficial owner of Youku ADSs, they will be deemed to have instructed the Youku depositary to give a discretionary proxy to the Youku Designee under the Youku Deposit Agreement, unless Youku informs the Youku depositary that (1) Youku does not wish such discretionary proxy to be given, (2) substantial opposition exists in respect of the contemplated Share Issuance and the Name Change, or (3) the rights of holders of Youku shares may be materially adversely affected by the contemplated Share Issuance and the Name Change. It is Youku's intention that the Youku Designee vote all such unvoted Youku Class A shares FOR the resolutions to authorize and approve the Share Issuance and the Name Change and FOR any resolution to adjourn the Youku AGM.

        Holders of Youku ADSs may vote at the Youku AGM if they cancel their ADSs and become a holder of Youku shares by the close of business on                        , 2012 (New York City time). Youku ADS holders wanting to cancel their ADSs need to make arrangements to deliver their ADSs to the Youku depositary for cancellation prior to the close of business in New York City on                         , 2012 and complete certain other procedures required by the Youku depositary. Persons who hold Youku ADSs in a brokerage, bank or nominee account, must contact their broker, bank or nominee to find out what actions they need to take to instruct the broker, bank or nominee to cancel the ADSs on their behalf.

        Persons holding Youku ADSs in a brokerage, bank or nominee account should consult with their broker, bank or nominee to obtain directions on how to provide such broker, bank or nominee with instructions on how to vote their Youku ADSs.

        Youku ADS holders who request the cancellation of their Youku ADSs between the Youku ADS record date and the Youku share record date will be asked to certify that such Youku ADS holders (1) were a holder of the Youku ADSs being cancelled as of the Youku ADS record date and have not given, and will not give, directly or indirectly, voting instructions to the Youku depositary as to the Youku ADSs presented for cancellation, or (2) were not a holder of the Youku ADSs being cancelled as of the Youku ADS record date and will not vote the Youku Class A shares at the Youku AGM.

        In the event that the Youku depositary receives voting instructions from holders of Youku ADSs that exceed the number of corresponding Youku Class A shares held on deposit as of the Youku share record date, the Youku depositary will prorate the voting instructions received and vote the Youku Class A shares held as of the Youku share record date in accordance with such prorated voting instructions.


The Annual General Meeting of Tudou Shareholders (page 93)

        Tudou will hold the Tudou AGM on                        , 2012, beginning at          (local time) at                    , People's Republic of China. The purposes of the Tudou AGM are to consider and, if thought fit, to pass the following resolutions:

    as a special resolution, to authorize and approve the Merger Agreement, the Plan of Merger and the Merger;

    as an ordinary resolution, to approve the Re-election of Tudou Directors; and

 

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    as an ordinary resolution, that in the event that there are insufficient proxies received at the time of the Tudou AGM to authorize and approve the Merger Agreement, the Plan of Merger and the Merger or approve the Re-election of Tudou Directors, the chairman of the Tudou AGM be instructed to adjourn the Tudou AGM in order to allow Tudou to solicit additional proxies in favor of the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger and the approval of the Re-election of Tudou Directors.


Vote Required at the Tudou AGM; Youku Voting Agreements

        In order for the Merger to be completed, the Merger Agreement, the Plan of Merger and the Merger must be authorized and approved by a special resolution of Tudou passed by an affirmative vote of a majority of at least two-thirds of such shareholders of Tudou as, being entitled to do so, vote in person or by proxy as a single class at the Tudou AGM. As of April 17, 2012, there were 115,452,677 Tudou shares issued and outstanding and entitled to vote.

        As an inducement for Youku to enter into the Merger Agreement, certain principal shareholders of Tudou, including Gary Wei Wang and certain of his affiliates, Crescent P.E., Ltd., Crescent Peak Ltd., Crescent Peak II Limited, GGV II Delaware L.L.C., IDG Technology Venture Investment III, L.P., IDG Technology Venture Investment IV, L.P. and Sennett Investments (Mauritius) Pte Ltd. (the "Tudou Voting Shareholders") entered into voting agreements with and in favor of Youku on March 11, 2012 (the "Youku Voting Agreements") contemporaneously with the execution and delivery of the Merger Agreement. As of April 17, 2012, an aggregate of 64,977,879 Tudou shares, constituting approximately 55.8% of the total outstanding shares of Tudou and 65.3% of the voting power of Tudou, are subject to the Youku Voting Agreements. Under the Youku Voting Agreements, the Tudou Voting Shareholders have agreed, among other things, to vote all Tudou shares and Tudou ADSs beneficially owned by them in favor of the resolutions to authorize and approve the Merger Agreement, the Plan of Merger and the Merger. Please see "The Voting Agreement—Voting Agreements between Youku and Certain Tudou Shareholders" for more information.

        As of April 17, 2012, excluding Tudou share options granted to them, all of Tudou directors and executive officers that beneficially owned Tudou shares were subject to the Youku Voting Agreements.


Tudou Shareholders and ADS Holders Entitled to Vote; Voting Material

        Each Tudou share carries one vote. As of April 17, 2012, there were 115,452,677 Tudou shares issued and outstanding and entitled to be voted at the Tudou AGM. Only Tudou shareholders entered in the register of members of Tudou at the close of business on                      , 2012 (New York City time), the Tudou share record date, will receive the proxy card directly from Tudou. Tudou shareholders registered in the register of members of Tudou as of the close of business on the Tudou share record date or their proxy holders are entitled to vote, with each Tudou share carrying one vote, and may participate in the Tudou AGM or any adjournment thereof, unless they sell their Tudou shares before                        , 2012. Tudou shareholders wanting to vote by proxy should simply indicate on their proxy card how they want to vote, sign and date the proxy card, and mail the proxy card in the return envelope as soon as possible but in any event at least 48 hours before the time of the Tudou AGM.

        Holders of Tudou ADSs as of the close of business on                        , 2012 (New York City time) cannot attend or vote at the Tudou AGM directly, but may instruct the Tudou depositary how to vote the shares underlying the ADSs by completing and signing an ADS voting instruction card provided by the Tudou depositary and returning it in accordance with the instructions printed on it as soon as possible. The Tudou depositary must receive the ADS voting instruction card no later than 10:00 a.m. New York City time on                        , 2012. The Tudou depositary shall endeavor, in so far as practicable, to vote or cause to be voted the Tudou shares represented by Tudou ADSs in accordance with your voting instructions. If banks, brokers or other nominee holders of Tudou ADSs do not timely receive specific voting instructions from the beneficial owners of Tudou ADSs, they may, under the

 

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terms of Tudou Deposit Agreement, be deemed to have instructed the Tudou depositary to give a discretionary proxy to the Tudou Designee. Unless Tudou notifies the Tudou depositary that this provision will not apply, the Tudou Designee will receive a proxy from the Tudou depositary and will vote all such uninstructed Tudou Class B shares underlying Tudou ADSs FOR the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger, FOR the approval of the Re-election of Tudou Directors and FOR any adjournment of the Tudou AGM.

        Holders of Tudou ADSs may vote at the Tudou AGM if they cancel their ADSs and become a holder of Tudou shares by the close of business on                        , 2012 (New York City time). Tudou ADS holders wanting to cancel their ADSs need to make arrangements to deliver their ADSs to the Tudou depositary for cancellation prior to the close of business in New York City on                         , 2012 and complete certain other procedures required by the Tudou depositary.

        Persons holding Tudou ADSs in a brokerage, bank or nominee account should consult with their broker, bank or nominee to obtain directions on how to provide such broker, bank or nominee with instructions on how to vote their Tudou ADSs.


The Merger Agreement and Plan of Merger (page 134)

        On March 11, 2012, Youku, Merger Sub and Tudou entered into the Merger Agreement, which provides for the merger of Merger Sub with and into Tudou, with Tudou continuing as the surviving company and as a wholly owned subsidiary of Youku. Upon completion of the Merger, Tudou will cease to be a publicly traded company, and Tudou shareholders will cease to have any direct rights in Tudou as a shareholder or an ADS holder.

        Copies of the Merger Agreement and the Plan of Merger are attached as Appendix A to this joint proxy statement/prospectus. Both Youku and Tudou encourage you to read the entire Merger Agreement and Plan of Merger carefully because they are the principal legal documents governing the Merger.


Merger Consideration (page 134)

        The Merger Consideration that Tudou shareholders and Tudou ADS holders will receive in the Merger is described in more detail in "The Merger Agreement, the Plan of Merger and the Merger—Merger Consideration" on page 134. In summary, if the Merger is completed:

    1.
    other than as provided in paragraph (2) immediately below, each Tudou Class A share and each Tudou Class B share issued and outstanding immediately prior to the effective time of the Merger (other than the Excluded Tudou Shares and Dissenter Shares) shall be cancelled in exchange for the right to receive 7.177 Youku Class A shares; and

    2.
    each Tudou ADS shall be surrendered in exchange for the right to receive 1.595 Youku ADS.

        Youku anticipates that, following the Merger, the Tudou ADS holders and Tudou shareholders prior to the Merger will own approximately 28.5% of Youku's outstanding share capital on a fully diluted basis.

        The value of the Merger Consideration will fluctuate based on the trading price for Youku ADSs. Regardless of the trading price of Youku's ADSs on the NYSE on the effective date of the Merger, Tudou shareholders will receive 7.177 Youku Class A shares for each Tudou share they own and Tudou ADS holders will receive 1.595 Youku ADS for each Tudou ADS they own. The market value of the Youku shares and Youku ADSs that Tudou shareholders and Tudou ADS holders, respectively, will receive in the Merger will increase or decrease as the trading price of Youku ADSs increases or decreases, and may be different at the time the Merger is completed than it was at the time the Merger Agreement was signed or will be at the time of the Tudou AGM to approve the Merger or the time of the Youku AGM to approve the Share Issuance and Name Change. The market price of Youku ADSs could be lower at any time prior to the completion of the Merger or at any time thereafter than

 

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it was at the date of the Merger Agreement. As of April 23, 2012, the closing price of Youku ADSs on the NYSE was US$21.82 per ADS. Tudou shareholders are urged to obtain current trading prices for Youku ADSs on the website of the New York Stock Exchange at http://www.nyse.com/. This website is not incorporated by reference in this joint proxy statement/prospectus.


Treatment of Tudou Share Options (page 136)

        Each option to purchase Tudou shares granted pursuant to Tudou's share incentive plan ("Tudou share option") that is outstanding immediately prior to the effective time, whether vested or unvested, shall, at the effective time of the Merger, be assumed by Youku and be replaced by Youku with an option to purchase Youku Class A shares granted under Youku's share incentive plans ("Youku share option"). Each such Youku share option shall be exercisable for that number of whole Youku Class A shares (rounded down to the nearest whole share) equal to the product of (1) the total number of Tudou shares subject to such Tudou share option and (2) 7.177, at an exercise price per Youku Class A share (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (x) the exercise price per share of the Tudou share option by (y) 7.177. Each such Youku share option shall continue to have, and shall be subject to, the same terms and conditions as applied to the Tudou share option immediately prior to the effective time (but taking into account any changes thereto provided for in the Tudou share incentive plan, any award agreement, or any other contract or agreement, including by reason of the Merger Agreement or the transactions contemplated thereby). In addition, Tudou may consider the immediate vesting upon the closing of the Merger of the Tudou share options held by certain directors and officers of Tudou, including Mr. Gary Wei Wang, chairman of the Tudou Board and Tudou's chief executive officer, in which case such Tudou share options shall become fully vested and exercisable upon the closing of the Merger.


Reasons for the Merger and Recommendation of the Youku Board (page 102)

        The Youku Board, in consultation with Youku's management and legal and financial advisors, evaluated the proposed Merger, including the terms and conditions of the Merger Agreement. On March 8, 2012, the Youku Board unanimously (1) approved the Merger Agreement, the Plan of Merger, the Merger and the other transactions contemplated by the Merger Agreement, (2) directed that the Share Issuance and the Name Change be submitted to Youku shareholders for authorization and approval, and (3) recommended that Youku shareholders authorize and approve the Share Issuance and the Name Change. Accordingly, the Youku Board recommends that Youku shareholders vote "FOR" the resolutions to authorize and approve the Share Issuance and the Name Change. For a summary of the material factors considered by the Youku Board in reaching its decision to authorize and adopt the Merger Agreement, the Plan of Merger and The Merger, please see "The Merger—Reasons for the Merger and Recommendation of the Youku Board" beginning on page 102.


Reasons for the Merger and Recommendation of the Tudou Board (page 105)

        The Tudou Board, acting with the advice and assistance of Tudou's management and financial and legal advisors, evaluated the proposed Merger, including the terms and conditions of the Merger Agreement. On March 10, 2012, the Tudou Board (1) determined that the Merger Agreement, the Plan of Merger and the Merger are advisable, fair to and in the best interests of Tudou and its shareholders, (2) authorized and approved the Merger Agreement, the Plan of Merger and the Merger; (3) directed that the Merger Agreement, the Plan of Merger and the Merger be submitted to Tudou shareholders for authorization and approval; and (4) recommended that Tudou shareholders authorize and approve the Merger Agreement, the Plan of Merger and the Merger by way of special resolution. Accordingly, the Tudou Board recommends that Tudou shareholders vote "FOR" the resolution to authorize and approve the Merger Agreement, the Plan of Merger and the Merger. For a summary of the material factors considered by the Tudou Board in reaching its decision to authorize and adopt the Merger

 

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Agreement, the Plan of Merger and The Merger, please see "The Merger—Reasons for the Merger and Recommendation of the Tudou Board" beginning on page 105.


Opinion of Allen & Company LLC as Financial Advisor to Youku (page 106)

        In connection with the Merger, Allen & Company LLC ("Allen & Company") delivered a written opinion, dated March 11, 2012, to the Youku Board as to the fairness, from a financial point of view and as of the date of the opinion, to Youku of the 7.177x Share Exchange Ratio. The full text of Allen & Company's written opinion, dated March 11, 2012, which describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken, is attached to this joint proxy statement/prospectus as Appendix C. Allen & Company's opinion was intended for the benefit and use of the Youku Board (in its capacity as such) in connection with its evaluation of the Share Exchange Ratio from a financial point of view to Youku and does not address any other aspect of the Merger. Allen & Company's opinion does not constitute a recommendation as to what course of action the Youku Board or Youku should pursue in connection with the Merger, or otherwise address the merits of the underlying decision by Youku to engage in the Merger, including in comparison to other strategies or transactions that might be available to Youku or in which Youku might engage. The opinion does not constitute advice or a recommendation to any security holder as to how such security holder should vote or act on any matter relating to the Merger or otherwise.


Opinion of Morgan Stanley Asia Limited as Financial Advisor to Tudou (page 113)

        Tudou retained Morgan Stanley Asia Limited ("Morgan Stanley"), to act as its financial advisor in connection with the Merger. On March 8, 2012, Morgan Stanley rendered its oral opinion, subsequently confirmed in writing, to the Tudou Board that as of such date and, based upon and subject to the assumptions, qualifications and limitations set forth in the opinion, the Share Exchange Ratio and the ADS Exchange Ratio pursuant to the Merger Agreement were fair, from a financial point of view, to the holders of Tudou shares and the holders of Tudou ADSs, respectively. The full text of Morgan Stanley's written fairness opinion dated March 10, 2012, is attached as Appendix D to this joint proxy statement/prospectus. Morgan Stanley's opinion is directed to the Tudou Board and addresses only the fairness from a financial point of view of the Share Exchange Ratio and the ADS Exchange Ratio pursuant to the Merger Agreement to the holders of Tudou shares and Tudou ADSs, respectively, as of the date of the opinion. It does not address any other aspects of the Merger and does not constitute a recommendation to any holder of ordinary shares or ADSs of Tudou or Youku as to how to vote at the shareholder meetings.


Conditions to the Completion of the Merger (page 149)

        The completion of the transactions contemplated by the Merger Agreement, including the Merger, is subject to the satisfaction of the following conditions:

    the Merger Agreement, the Plan of Merger and the Merger being authorized and approved by Tudou shareholders, and the Share Issuance being authorized and approved by Youku shareholders;

    the registration statement on Form F-4 (of which this joint proxy statement/prospectus is a part) having become effective under the Securities Act, and not having become the subject of any stop order, or any proceedings to seek a stop order, to suspend the effectiveness of the Form F-4;

    the Youku ADSs issuable as Merger Consideration pursuant to the Merger Agreement having been approved for listing on the NYSE, subject to official notice of issuance; and

    no governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order which (1) is in effect and (2) has the effect of making the Merger illegal or otherwise prohibiting or preventing consummation of the Merger.

 

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        The obligations of Youku and Merger Sub to consummate the Merger are also subject to the satisfaction, or waiver by Youku, of the following conditions, among others:

    (1) certain representations and warranties of Tudou in the Merger Agreement being true and correct in all material respects as of the date of the Merger Agreement and as of the closing date as if made on and as of such date and time, (2) certain representations and warranties of Tudou in the Merger Agreement being true and correct in all but immaterial respects as of the date of the Merger Agreement and as of the closing date as if made on and as of such date and time, and (3) subject to certain exceptions, certain representations and warranties of Tudou set forth in the Merger Agreement being true and correct interpreted without giving effect to certain materiality qualifiers;

    Tudou having performed or complied in all material respects with all covenants and agreements required to be performed or complied with by it under the Merger Agreement prior to or at the time of closing;

    since the date of the Merger Agreement, there not having been a material adverse effect on Tudou and the Tudou Subsidiaries;

    all nominee shareholders of the variable interest entities of Tudou having transferred, free of any third-party rights, claims or liens (except for certain permitted liens), all of their respective equity interests in each such variable interest entity to the person(s) designated by Youku; and

    Tudou shareholders holding more than 10% of the outstanding Tudou shares not having validly served a written objection under Section 238 of the Cayman Companies Law.

        The obligations of Tudou to consummate the Merger are subject to the satisfaction, or waiver by Tudou, of the following conditions, among others:

    (1) certain representations and warranties of Youku and Merger Sub in the Merger Agreement being true and correct in all material respects as of the date of the Merger Agreement and as of the closing date as if made on and as of such date and time, (2) certain representations and warranties of Youku and Merger Sub in the Merger Agreement being true and correct in all but immaterial respects as of the date of the Merger Agreement and as of the closing date as if made on and as of such date and time, and (3) subject to certain exceptions, certain representations and warranties of Youku and Merger Sub set forth in the Merger Agreement being true and correct interpreted without giving effect to certain materiality qualifiers;

    Youku and Merger Sub having performed or complied in all material respects with all covenants and agreements required to be performed or complied with by them under the Merger Agreement prior to or at the time of closing; and

    since the date of the Merger Agreement, there not having been a material adverse effect on Youku and the Youku Subsidiaries.

        Youku and Tudou cannot assure you that all of the conditions to complete the Merger will be satisfied or waived.


Termination of the Merger Agreement (page 150)

        The Merger Agreement may be terminated by either or both of Youku and Tudou, as described in more detail in "The Merger Agreement and Plan of Merger—Termination of the Merger Agreement."

 

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        Tudou is required to pay Youku a termination fee of US$100.0 million if the Merger Agreement is terminated by Youku because:

    the representations and warranties of Tudou shall not be true and correct or Tudou shall have breached or failed to perform any of its covenants or agreements contained in the Merger Agreement; or

    all of the closing conditions to the completion of the Merger or to the obligations of Youku and Merger Sub to consummate the Merger are otherwise satisfied, Youku has confirmed by notice to Tudou that all conditions to its obligation to consummate the Merger have been satisfied or that it will waive any such unsatisfied conditions, and Tudou fails to consummate the Merger within three business days following the date the closing should have occurred as set forth in the Merger Agreement.

        Youku is required to pay Tudou a termination fee of US$100.0 million if the Merger Agreement is terminated by Tudou because:

    the representations and warranties of Youku or Merger Sub shall not be true and correct or Youku or Merger Sub shall have breached or failed to perform any of their covenants or agreements contained in the Merger Agreement; or

    all of the closing conditions to the completion of the Merger or to the obligations of Tudou to consummate the Merger are otherwise satisfied, Tudou has confirmed by notice to Youku that all conditions to its obligation to consummate the Merger have been satisfied or that it will waive any such unsatisfied conditions, and Youku or Merger Sub fails to consummate the Merger within three business days following the date the closing should have occurred as set forth in the Merger Agreement.

        In addition, in the event that the Merger Agreement is terminated by Youku or Tudou due to Youku's shareholders not having authorized and approved the Share Issuance, Youku shall pay Tudou a termination fee of US$10.0 million.


Fees and Expenses (page 152)

        Whether or not the Merger is completed, all costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby will be paid by the party incurring such expenses except as otherwise provided in the Merger Agreement.


Listing of Youku ADSs (page 144)

        Youku ADSs currently trade on the NYSE under the symbol "YOKU." It is a condition to completion of the Merger that the Youku ADSs to be delivered to Tudou ADS holders in connection with the Merger be approved for listing on the NYSE, subject to official notice of issuance. Youku will use its reasonable best efforts to cause any Youku ADSs to be issued in connection with the Merger to be approved for listing on the NYSE.


Delisting of Tudou ADSs (page 144)

        Tudou ADSs currently trade on the NASDAQ under the symbol "TUDO." If the Merger is completed, all of the Tudou ADSs will be de-listed from the NASDAQ, and the Tudou ADSs and the underlying Tudou shares will be deregistered under the Exchange Act.


Acquisition Proposals Relating to Tudou (page 145)

        Tudou will not, nor will it permit any of its subsidiaries or consolidated affiliated entities (collectively, the "Tudou Subsidiaries") to, nor will it authorize or permit any officer, director or

 

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employee or any advisor or representative of Tudou or any of the Tudou Subsidiaries to, directly or indirectly, (1) solicit, initiate or encourage any inquiry or the making of any proposal or offer or any other effort or attempt that constitutes, or may reasonably be expected to lead to, any acquisition proposal, (2) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to Tudou or any of the Tudou Subsidiaries, or take any other action to facilitate, any acquisition proposal, or (3) enter into any letter of intent, agreement or agreement in principle with respect to an acquisition proposal.

        Prior to obtaining the required Tudou shareholder approval of the Merger Agreement and the Merger, the Tudou Board may change their recommendation to Tudou shareholders that they approve the Merger Agreement and the Merger if the Tudou Board has determined in good faith, after consultation with its financial advisor and outside legal advisor, that failure to effect a change of recommendation would constitute a breach of the directors' fiduciary duties under applicable law; provided, however, that prior to taking such action or announcing the intention to do so, (1) the Tudou Board has given Youku at least five business days' prior written notice of its intention to take such action and a description of the reasons for taking such action, (2) Tudou has negotiated, and has caused its representatives to negotiate, in good faith with Youku during such notice period to enable Youku to revise the terms of the Merger Agreement in such a manner that would obviate the need for taking such action, and (3) following the end of such notice period, the Tudou Board shall have considered in good faith any revisions to the Merger Agreement proposed in writing by Youku in a manner that would form a binding contract if accepted by Tudou, and shall have determined in good faith, after consultation with its financial advisor and outside legal advisor, that failure to effect a change of recommendation would constitute a breach of the directors' fiduciary duties under applicable law.


Competing Proposals Relating to Youku (page 145)

        Until the earlier of the effective time of the Merger or the termination of the Merger Agreement, Youku will not, nor will it permit any of its subsidiaries or consolidated affiliated entities (collectively, the "Youku Subsidiaries") to, nor will it authorize or permit any representatives of Youku or any of the Youku Subsidiaries to, directly or indirectly, (1) solicit, initiate or encourage any inquiry or the making of any proposal or offer or any other effort or attempt that constitutes, or may reasonably be expected to lead to, any competing proposal, (2) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to Youku or any of the Youku Subsidiaries, or take any other action to facilitate, any competing proposal, or (3) enter into any letter of intent, agreement or agreement in principle with respect to any competing proposal.

        Prior to the time the vote of Youku shareholders to authorize and approve the Share Issuance and the Name Change, but not after, the Youku Board may change its recommendation that shareholders of Youku vote in favor of the Share Issuance and the Name Change if the Youku Board has determined in good faith, after consultation with its financial advisor and outside legal advisor, that failure to take such action would constitute a breach of the directors' fiduciary duties under applicable law; provided, however, that prior to taking such action or announcing the intention to do so, (1) the Youku Board has given Tudou at least five business days' prior written notice of its intention to take such action and a description of the reasons for taking such action, (2) Youku has negotiated, and has caused its representatives to negotiate, in good faith with Tudou during such notice period to enable Tudou to revise the terms of the Merger Agreement in such a manner that would obviate the need for taking such action and (3) following the end of such notice period, the Youku Board shall have considered in good faith any revisions to the Merger Agreement proposed in writing by Tudou in a manner that would form a binding contract if accepted by Youku, and shall have determined in good faith, after consultation with its financial advisor and outside legal advisor, that failure to change its

 

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recommendation that shareholders of Youku vote in favor of the Share Issuance and Name Change would constitute a breach of the directors' fiduciary duties under applicable law.


Appraisal Rights (page 130)

        Tudou shareholders who dissent from the Merger will have the right to seek appraisal and payment of the fair value of their Tudou shares if the Merger is completed, but only if they deliver to Tudou, before the vote is taken on the resolution to authorize and approve the Merger Agreement, the Plan of Merger and the Merger, a written objection to the Merger and they subsequently comply with all procedures and requirements of Section 238 of the Cayman Companies Law for the exercise of appraisal rights. The fair value of Tudou shares as determined under that statute could be more than, the same as, or less than the Per Share Merger Consideration such Tudou shareholder would receive pursuant to the Merger Agreement if such Tudou shareholder did not exercise appraisal rights with respect to his or her shares.

        Tudou ADS holders will not have the right to seek appraisal and payment of the fair value of the shares underlying their ADSs. The Tudou depositary will not attempt to perfect any appraisal rights with respect to any of the Tudou shares that it holds, even if an ADS holder requests the Tudou depositary to do so. Tudou ADS holders wishing to exercise appraisal rights must surrender their ADSs at the Tudou depositary's office, pay certain fees and complete certain procedures required by the Tudou depositary under the Tudou Deposit Agreement, and become registered holders of Tudou shares by the close of business on                , 2012 (New York City time). Thereafter, such former Tudou ADS holders must comply with the procedures and requirements for exercising dissenter and appraisal rights with respect to the Tudou shares under Section 238 of the Cayman Companies Law.

        Youku shareholders and ADS holders are not entitled to appraisal rights.

        For more information, please see "The Merger—Appraisal Rights" beginning on page 130.


Board Representation Rights (page 147)

        Prior to the effective time of the Merger, Youku shall organize a meeting of the Youku Board for the purpose of appointing to the Youku Board as a director (1) Mr. Gary Wei Wang, who, subject to the paragraph below, shall be entitled to serve as a director on the Youku Board for a term of one year, and (2) Mr. Jixun Foo, who, subject to the paragraph below, shall be entitled to serve as a director on the Youku Board until his resignation or the designation of his successor by GGV II Delaware L.L.C. The Youku Board shall cause any successor so designated by GGV II Delaware L.L.C. to be appointed to the Youku Board as a director.

        Notwithstanding anything in the preceding paragraph to the contrary, at such time after the effective time of the Merger as Crescent Peak, Ltd, Crescent Peak II Limited, Crescent P.E., Ltd., Gary Wei Wang , First Easy Group Limited (a company ultimately owned by Mr. Gary Wei Wang's family trust), and GGV II Delaware L.L.C. (collectively, the "Tudou Principal Shareholders") beneficially own, in the aggregate, less than 5% of the total issued and outstanding Youku shares on a fully diluted basis for the first time, (1) the board representation rights discussed in the preceding paragraph shall immediately terminate and upon the request of the Youku Board, Mr. Gary Wei Wang and/or Mr. Jixun Foo shall tender his respective resignation from the Youku Board and (2) Youku may remove Mr. Wang and/or Mr. Foo from the Youku Board pursuant to its then effective articles of association.

        For more information, please see "The Merger Agreement and Plan of Merger—Board Representation Rights" beginning on page 147.

 

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Interests of Tudou's Directors and Executive Officers in the Merger (page 122)

        In considering the recommendation of the Tudou Board that Tudou shareholders vote for the authorization and approval of the Merger Agreement, the Plan of Merger and the Merger, Tudou shareholders should be aware that certain members of the Tudou Board and certain executive officers of Tudou have agreements and arrangements that may result in their having interests in the Merger different from, or in addition to, the interests of other Tudou shareholders generally. These interests include, but are not limited to, treatment of Tudou share options in the Merger and board representation rights on the Youku Board for Mr. Gary Wei Wang. See certain directors and executive officers of Tudou including Mr. Gary Wei Wang, and an individual appointed by GGV II Delaware L.L.C., one of the principal shareholders of Tudou. The Tudou Board was aware of these agreements and arrangements during its deliberations of the merits of the Merger and in determining to recommend that Tudou shareholders vote to authorize and approve the Merger Agreement, the Plan of Merger and the Merger.

        Please see "The Merger—Interests of Tudou's Directors and Executive Officers in the Merger" beginning on page 122 for more information.


Lock-up Restriction for Tudou Voting Shareholders

        In the Youku Voting Agreements, each Tudou Voting Shareholder has agreed to comply with restrictions on the disposition and encumbrance of the Youku shares or Youku ADSs received by it for 180 days following the closing of the Merger.


No Regulatory Approvals Necessary to Complete the Merger

        No further regulatory filings or approvals will be required for the completion of the Merger other than the filing of the Plan of Merger (and supporting documents as specified in the Cayman Companies Law) with the Cayman Islands Registrar of Companies and, in the event the Merger becomes effective, a copy of the certificate of merger being given to the shareholders and creditors of Tudou and Merger Sub as at the time of the filing of the Plan of Merger and notice of merger being published in the Cayman Islands Gazette.


Accounting Treatment (page 124)

        The merger will be accounted for by Youku as a business combination using the acquisition method of accounting under accounting principles generally accepted in the United States, or U.S. GAAP.

        For more detail on the accounting treatment of the Merger, please see "Unaudited Pro Forma Condensed Combined Financial Information—Notes to Unaudited Pro Forma Condensed Combined Financial Statements" beginning on page 46.


Material Tax Consequences of the Merger

Material U.S. Federal Income Tax Consequences (page 125)

        The Merger is intended to qualify as a reorganization under section 368(a) of the Internal Revenue Code of 1986, as amended, (the "Internal Revenue Code") for U.S. federal income tax purposes. Assuming that the Merger qualifies as a reorganization under section 368(a) of the Internal Revenue Code and neither Youku nor Tudou is or has been a "passive foreign investment company" for U.S. federal income tax purposes (a "PFIC"), Tudou shareholders will not recognize gain or loss on the exchange of their Tudou shares for Youku Class A shares and Tudou ADS holders will not recognize gain or loss on the exchange of their Tudou ADSs for Youku ADSs, although gain or loss may be recognized upon the receipt of cash in lieu of fractional Youku Class A shares or Youku ADSs.

 

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Youku and Tudou cannot assure Tudou shareholders and Tudou ADS holders that the Internal Revenue Service (the "IRS") will agree with the treatment of the Merger as a reorganization under section 368(a) of the Internal Revenue Code. Tax matters are complicated, and the tax consequences of the Merger to each Tudou shareholder or each Tudou ADS holder will depend on the facts of each holder's situation. Tudou shareholders and Tudou ADS holders are urged to read the discussion under "The Merger—Material U.S. Federal Income Tax Consequences" and to consult their tax advisors for a full understanding of the tax consequences of their participation in the Merger.

Material PRC Income Tax Consequences (page 129)

        Tudou does not believe that it would be considered a resident enterprise under the PRC Enterprise Income Tax Law (the "EIT Law") or that the gain, if any, recognized on the receipt of the Merger Consideration for Tudou shares or Tudou ADSs should otherwise be subject to PRC income tax to holders of such Tudou shares or Tudou ADSs that are not PRC residents. If, however, the PRC tax authorities were to determine that Tudou should be considered a resident enterprise under the EIT Law or that the receipt of the Merger Consideration for Tudou shares or Tudou ADSs should otherwise be subject to PRC income tax, then a gain recognized on the receipt of the Merger Consideration for Tudou shares or Tudou ADSs pursuant to the Merger by Tudou shareholders or Tudou ADS holders, respectively, who are non-resident enterprises under the EIT Law could be treated as PRC-source income that would be subject to PRC withholding tax at a rate of 10%, unless otherwise reduced pursuant to an applicable tax treaty. Youku's and Tudou's current understanding is that none of Youku, Merger Sub or Tudou will be required to deduct or withhold any amount from the Merger Consideration under applicable PRC law. In the event that circumstances change and a deduction or withholding is required, each of the surviving company, Tudou, Youku and the exchange agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Merger Agreement such amounts as it reasonably determines is required to deduct and withhold with respect to the making of such payment under any applicable tax laws of the PRC. To the extent that amounts are so withheld and paid over to the appropriate governmental entity by the surviving company, Tudou, Youku or the exchange agent, as the case may be, such withheld amounts shall be treated for all purposes of the Merger Agreement as having been paid to the holder of Tudou shares or Tudou ADSs in respect to which such deduction and withholding was made by the surviving company or Youku, as the case may be. In the event that deduction or withholding in respect of PRC tax is necessary, Youku and Tudou will revise this joint proxy statement/prospectus to describe the proposed deduction or withholding, and Youku will file with the SEC an amendment to its registration statement on Form F-4, which will include the revised joint proxy statement/prospectus. You should consult your own tax advisor for a full understanding of the tax consequences of the Merger to you, including any PRC tax consequences. Please see "Material PRC Income Tax Consequences of the Merger" beginning on page 129 for additional information.

Material Cayman Islands Tax Consequences (page 130)

        The Cayman Islands currently has no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. No taxes, fees or charges will be payable to the Cayman Islands government in respect of the Merger or the receipt of Merger Consideration by Tudou shareholders or Tudou ADS holders under the terms of the Merger Agreement. This is subject to the qualification that (1) Cayman Islands stamp duty may be payable if any original transaction documents are brought to or executed in the Cayman Islands; and (2) registration fees will be payable to the Cayman Islands Registrar of Companies to register the Plan of Merger.

 

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Comparison of Rights of Holders of Youku Securities and Tudou Securities (page 228)

        In the Merger, Tudou shareholders will receive Youku Class A shares and Tudou ADS holders will receive Youku ADSs. The rights of Youku shareholders are governed by Cayman Islands law and the memorandum and articles of association of Youku, and the rights of Tudou shareholders are governed by Cayman Islands law and the memorandum and articles of association of Tudou. Upon completion of the Merger, the rights of Tudou shareholders who become shareholders of Youku in the Merger will be governed by Cayman Islands law and the memorandum and articles of association of Youku. There are certain differences between the rights of Tudou shareholders and the rights of Youku shareholders due to differences between the two companies' memorandum and articles of association. For a discussion of these differences, please see "Comparison of Rights of Holders of Youku Securities and Tudou Securities—Comparison of Rights of Youku and Tudou Shareholders" beginning on page 228.

        The rights of Tudou ADS holders are governed by the Tudou Deposit Agreement, and the rights of Youku ADS holders are governed by the Youku Deposit Agreement. Upon completion of the Merger, the rights of Tudou ADS holders who become Youku ADS holders in the Merger will be governed by the Youku Deposit Agreement. There are certain differences between the rights of Tudou ADS holders and those of Youku ADS holders under the respective deposit agreement. For a comparison of the material differences, please see "Comparison of Rights of Holders of Youku Securities and Tudou Securities—Comparison of Rights of Youku and Tudou American Depositary Share holders" beginning on page 238.


Comparative Market Price and Dividend Information

        The Youku ADSs are listed on the NYSE under the symbol "YOKU." The Tudou ADSs are currently listed on the NASDAQ under the symbol "TUDO." The table below sets forth, for the periods indicated, the per ADS high and low closing sales prices for the Youku ADSs on the NYSE and the Tudou ADSs on the NASDAQ.

 

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        Neither Youku nor Tudou has declared or paid any dividends on its ordinary shares or ADSs since their initial public offerings in December 2010 and August 2011, respectively.

 
  Youku ADSs
(in US$)
  Tudou ADSs
(in US$)
 
 
  High   Low   High   Low  

Annual information since listing

                         

2010

    42.7     29.72     N/A     N/A  

2011

    67.27     14.31     26.88     10.00  

Quarterly information for the past two years and subsequent quarters 2011, quarter ended

                         

March 31

    51.26     29.55     N/A     N/A  

June 30

    67.27     26.25     N/A     N/A  

September 30

    38.59     14.31     26.88     13.65  

December 31

    22.85     14.55     16.95     10.00  

2012, quarter ended

                         

March 31

    31.85     15.57     42.50     9.57  

Monthly information for the most recent six months

                         

October 2011

    22.85     15.65     16.95     12.25  

November 2011

    21.63     14.55     15.80     11.38  

December 2011

    20.43     15.67     13.25     10.00  

January 2012

    23.55     15.57     13.99     9.57  

February 2012

    25.39     20.88     16.66     13.80  

March 2012

    31.85     21.99     42.50     12.00  

April 2012 (though April 23)

    24.78     21.48     34.95     29.27  

        The following table presents the last reported closing sale price per ADS of the Youku ADS on the NYSE and of the Tudou ADSs on the NASDAQ (1) on March 9, 2012, the last full trading day prior to the public announcement by Youku and Tudou of the execution of the Merger Agreement, and (2) April 23, 2012, the last trading day for which this information could be calculated prior to the filing of Youku's registration statement on Form F-4, of which this joint proxy statement/prospectus is a part.

 
  Youku
ADSs(1)
  Tudou
ADSs(2)
 
 
  (US$)
  (US$)
 

March 9, 2012

    25.01     15.39  

April 23, 2012

    21.82     32.63  

(1)
Each Youku ADS represents 18 Youku Class A shares.

(2)
Each Tudou ADS represents 4 Tudou Class B shares.

        Tudou shareholders and ADS holders will not receive the Merger Consideration until after the proposed Merger is completed. There can be no assurance as to the trading prices of the Youku ADSs at the time of the closing of the proposed Merger. The market prices of the Youku ADSs and Tudou ADSs are likely to fluctuate prior to consummation of the Merger and cannot be predicted. Youku urges you to obtain current market information regarding the Youku ADSs and Tudou ADSs before you vote.

 

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Exchange Rates

        Substantially all of Youku and Tudou's operations are conducted in China and all of their revenues are denominated in Renminbi. This joint proxy statement/prospectus contains translations of RMB amounts into U.S. dollars at specific rates solely for the convenience of the reader. The conversion of RMB into U.S. dollars in this joint proxy statement/prospectus is based on the certified exchange rate published by the Board of Governors of the Federal Reserve Bank. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB in this joint proxy statement/prospectus were made at a rate of RMB6.2939 to US$1.00, the certified exchange rate in effect on December 31, 2011. Neither of Youku or Tudou makes any representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. The PRC government restricts the conversion of RMB into foreign currency and foreign currency into RMB for certain types of transactions. On April 20, 2012, the certified exchange rate was RMB6.3080 to US$1.00.

        The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. The source of these rates is the Federal Reserve Statistical Release.

 
  Exchange rate  
Period
  Period End   Average(1)   Low   High  
 
  (RMB Per US$1.00)
 

2007

    7.2946     7.5806     7.8127     7.2946  

2008

    6.8225     6.9193     7.2946     6.7800  

2009

    6.8259     6.8295     6.8470     6.8176  

2010

    6.6000     6.7608     6.8270     6.6000  

2011

    6.2939     6.4630     6.6364     6.2939  

October

    6.3547     6.3710     6.3825     6.3534  

November

    6.3765     6.3564     6.3839     6.3400  

December

    6.2939     6.3482     6.3733     6.2939  

2012

                         

January

    6.3080     6.3119     6.3330     6.2940  

February

    6.2935     6.2997     6.3120     6.2935  

March

    6.2975     6.3125     6.3315     6.2975  

April (through April 20, 2012)

    6.3080     6.3052     6.3150     6.2975  

Source: Federal Reserve Statistical Release

(1)
Annual averages were calculated by using the average of the exchange rates on the last day of each month during the relevant year. Monthly averages are calculated by using the average of the daily rates during the relevant month.

 

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SELECTED HISTORICAL FINANCIAL DATA OF YOUKU

        The table below sets forth the selected historical consolidated statement of operations data of Youku for the five years ended December 31, 2011 and the selected consolidated balance sheet data of Youku as of December 31, 2007, 2008, 2009, 2010 and 2011. The selected historical consolidated statement of operations data of Youku for the five years ended December 31, 2011 and the selected consolidated balance sheet data as of December 31, 2007, 2008, 2009, 2010 and 2011 have been derived from the audited historical consolidated financial statements of Youku. Youku's audited historical consolidated financial statements for the three years ended December 31, 2011 and as of December 31, 2010 and 2011 are contained in the Youku 2011 20-F and are incorporated by reference into this joint proxy statement/prospectus.

        You should read the following selected historical financial information in conjunction with the audited historical consolidated financial statements of Youku and related notes and "Item 5. Operating and Financial Review and Prospects," which are contained in the Youku 2011 20-F that Youku has previously filed with the SEC and which is incorporated in this joint proxy statement/prospectus by reference. See "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively.

 

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        The historical consolidated financial data for Youku has been prepared in accordance with U.S. GAAP. The historical results of Youku do not necessarily indicate results expected for any future periods.

 
  Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands, except for number of shares, ADSs, per share and per ADS information)
 

Selected Consolidated Statements of Operations Data:

                                     

Net revenues(1)

    1,778     33,022     153,626     387,097     897,624     142,619  

Cost of revenues(2)

    (46,148 )   (171,130 )   (216,708 )   (350,830 )   (697,337 )   (110,796 )
                           

Gross (loss) profit

   
(44,370

)
 
(138,108

)
 
(63,082

)
 
36,267
   
200,287
   
31,823
 

Operating expenses(2):

                                     

Sales and marketing

    (22,469 )   (35,086 )   (72,746 )   (130,238 )   (230,475 )   (36,619 )

Product development

    (15,530 )   (15,398 )   (20,908 )   (31,287 )   (72,573 )   (11,531 )

General and administrative

    (5,843 )   (14,367 )   (18,523 )   (28,957 )   (80,529 )   (12,795 )
                           

Total operating expenses

    (43,842 )   (64,851 )   (112,177 )   (190,482 )   (383,577 )   (60,945 )
                           

Loss from operations

   
(88,212

)
 
(202,959

)
 
(175,259

)
 
(154,215

)
 
(183,290

)
 
(29,122

)

Interest income

    1,013     5,384     2,054     1,170     23,693     3,764  

Interest expense

        (4,240 )   (6,835 )   (7,440 )   (6,825 )   (1,084 )

Amortization of debt issuance costs

        (2,380 )                

Change in fair value of derivative financial liabilities and warrant liability

    (2,422 )   (264 )   (2,313 )   (44,268 )        

Others, net

    (62 )   (1 )   67     69     (5,682 )   (903 )
                           

Loss before income taxes

   
(89,683

)
 
(204,460

)
 
(182,286

)
 
(204,684

)
 
(172,104

)
 
(27,345

)

Income taxes

                         

Net loss

   
(89,683

)
 
(204,460

)
 
(182,286

)
 
(204,684

)
 
(172,104

)
 
(27,345

)
                           

Net loss per share:

                                     

Basic

    (0.25 )   (0.56 )   (0.50 )   (0.44 )   (0.09 )   (0.01 )

Diluted

    (0.25 )   (0.56 )   (0.50 )   (0.44 )   (0.09 )   (0.01 )

Net loss per ADS(3):

                                     

Basic

    (4.42 )   (10.08 )   (8.98 )   (7.90 )   (1.55 )   (0.25 )

Diluted

    (4.42 )   (10.08 )   (8.98 )   (7.90 )   (1.55 )   (0.25 )

Shares used in computation, basic and diluted:

    365,011,250     365,134,375     365,432,916     466,340,541     1,992,923,515     1,992,923,515  

ADSs used in computation, basic and diluted:

    20,278,403     20,285,243     20,301,829     25,907,808     110,717,973     110,717,973  

Selected non-GAAP Financial Data(4)

                                     

Adjusted EBITDA

    (78,237 )   (172,371 )   (134,487 )   (99,514 )   (90,068 )   (14,311 )
                           

Adjusted net loss

    (86,012 )   (200,531 )   (175,408 )   (148,426 )   (124,610 )   (19,799 )
                           

(1)
Net revenues are presented net of commissions earned by third-party advertising agencies as set forth below:

 
  Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Commissions earned by third-party advertising agencies

        6,379     37,866     86,602     180,644     28,701  

 

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(2)
Including share-based compensation expenses as set forth below:

 
  Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Allocation of Share-based Compensation Expenses

                                     

Cost of revenues

        259     283     918     3,894     619  

Sales and marketing

    141     861     1,690     5,954     14,196     2,255  

Product development

    684     1,401     1,657     3,049     12,233     1,944  

General and administrative

    424     1,144     935     2,069     17,171     2,728  
                           

Total

    1,249     3,665     4,565     11,990     47,494     7,546  
                           
(3)
Each ADS represents 18 Youku Class A shares.

(4)
To supplement Youku's consolidated financial results presented in accordance with U.S. GAAP, Youku uses the following measures defined as non-GAAP financial measures in evaluating its business: adjusted net loss and adjusted EBITDA. Youku defines adjusted net loss as net loss excluding share-based compensation expenses and change in fair value of derivative financial liabilities and warrant liability. Youku defines adjusted EBITDA as net loss before income taxes, interest expense, interest income, depreciation and amortization (excluding amortization of purchased contents), further adjusted for change in fair value of derivative financial liabilities and warrant liability, share-based compensation expenses and other non-operating items. Youku presents non-GAAP financial measures because they are used by its management to evaluate its operating performance. Youku also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating its consolidated results of operations in the same manner as its management and in comparing financial results across accounting periods and to those of its peer companies. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table below.

 
  Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Net loss

    (89,683 )   (204,460 )   (182,286 )   (204,684 )   (172,104 )   (27,345 )

Add back:

                                     

share-based compensation expenses

    1,249     3,665     4,565     11,990     47,494     7,546  

change in fair value of derivative financial liabilities and warrant liability

    2,422     264     2,313     44,268          
                           

Adjusted net loss

    (86,012 )   (200,531 )   (175,408 )   (148,426 )   (124,610 )   (19,799 )
                           

 

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  Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Net loss

    (89,683 )   (204,460 )   (182,286 )   (204,684 )   (172,104 )   (27,345 )

Add (deduct):

                                     

Income taxes

                         

Interest expense

        4,240     6,835     7,440     6,825     1,084  

Interest income

    (1,013 )   (5,384 )   (2,054 )   (1,170 )   (23,693 )   (3,764 )

Depreciation and amortization (excluding amortization of acquired content)

    8,726     26,923     36,207     42,711     45,728     7,265  

Share-based compensation expenses

    1,249     3,665     4,565     11,990     47,494     7,546  

Amortization of debt issuance costs

        2,380                  

Change in fair value of derivative financial liabilities and warrant liability

    2,422     264     2,313     44,268          

Others, net

    62     1     (67 )   (69 )   5,682     903  
                           

Adjusted EBITDA

    (78,237 )   (172,371 )   (134,487 )   (99,514 )   (90,068 )   (14,311 )
                           

        The following table presents a summary of Youku's selected consolidated balance sheet data as of December 31, 2007, 2008, 2009, 2010 and 2011:

 
  Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Selected Consolidated Balance Sheet Data:

                                     

Cash and cash equivalents

    157,755     88,915     301,608     1,811,423     2,292,538     364,248  

Total current assets

    172,933     228,600     384,322     2,063,085     4,147,780     659,017  

Total assets

    219,214     291,746     441,741     2,190,168     4,675,558     742,872  

Total current liabilities

    22,616     60,159     132,479     260,225     462,999     73,563  

Total liabilities

    22,616     92,115     146,754     278,680     470,381     74,736  

Convertible redeemable preferred shares

    302,769     507,614     780,599              

Total equity (deficit)

    (106,171 )   (307,983 )   (485,612 )   1,911,488     4,205,177     668,136  

 

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SELECTED HISTORICAL FINANCIAL DATA OF TUDOU

        The table below sets forth the selected historical consolidated statement of operations data of Tudou for the five years ended December 31, 2011 and the selected consolidated balance sheet data of Tudou as of December 31, 2008, 2009, 2010 and 2011.

        The selected historical consolidated statements of operations data of Tudou for the three years ended December 31, 2011 and the selected consolidated balance sheet data as of December 31, 2010 and 2011 have been derived from the audited historical consolidated financial statements of Tudou included elsewhere in this joint proxy statement/prospectus. The selected historical consolidated statement of operations data of Tudou for the fiscal years ended December 31, 2007 and 2008 and the selected consolidated balance sheet data as of December 31, 2008 and 2009 have been derived from the audited historical consolidated financial statements of Tudou not included in this joint proxy statement/prospectus.

        You should read the following selected historical financial information in conjunction with the audited historical consolidated financial statements of Tudou and related notes included in this joint proxy statement/prospectus and "Operating and Financial Review and Prospects of Tudou" in this joint proxy statement/prospectus.

 

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        The selected historical consolidated financial data for Tudou has been prepared in accordance with U.S. GAAP. The historical results of Tudou do not necessarily indicate results expected for any future periods.

 
  For the Year Ended December 31,  
 
  2007   2008   2009   2010   2011   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands, except share and per share data)
 

Selected Consolidated Statements of Operations

                                     

Net revenues

    6,618     26,220     89,147     286,258     512,195     81,380  

Cost of revenues(1)

    (72,,394 )   (143,332 )   (127,182 )   (226,399 )   (427,842 )   (67,977 )
                           

Gross profit (loss)

    (65,777 )   (117,111 )   (38,035 )   59,8589     84,354     13,402  

Operating expenses:

                                     

Sales and marketing expenses(1)

    (12,997 )   (42,574 )   (73,435 )   (143,224 )   (286,848 )   (45,576 )

General and administrative expenses(1)

    (11,824 )   (37,781 )   (37,586 )   (104,911 )   (174,972 )   (27,800 )

Impairment of equipment

        (8,736 )   (2,372 )            
                           

Total operating expenses

    (24,821 )   (89,091 )   (113,393 )   (248,136 )   (461,819 )   (73,376 )
                           

Loss from operations

    (90,598 )   (206,203 )   (151,428 )   (188,277 )   (377,466 )   (59,973 )

Finance income

    2,545     3,573     3,104     331     428     68  

Finance expenses

                (12,851 )   (4,771 )   (758 )

Other income (expense), net

    (21 )   (237 )   (63 )   1     (134 )   (21 )

Foreign exchange gain (loss)

    (7,811 )   (9,772 )   3,610     (10,957 )   (15,486 )   (2,461 )

Beneficial conversion charge on convertible loan

                (10,967 )        

Fair value changes in warrant liabilities

                (124,680 )   (113,733 )   (18,070 )
                           

Loss before income taxes

    (95,884 )   (212,639 )   (144,777 )   (347,400 )   (511,162 )   (81,215 )

Income taxes

    (0.0 )*                    

Net loss

    (95,884 )   (212,639 )   (144,777 )   (347,400 )   (511,162 )   (81,215 )
                           

Net loss attributable to ordinary shareholders

    (85,192 )   (195,101 )   (145,086 )   (362,384 )   (526,047 )   (83,580 )
                           

Loss per ordinary share basic and diluted

    (7.10 )   (16.26 )   (12.09 )   (30.20 )   (10.51 )   (1.67 )

Weighted average number of ordinary shares used in computing loss per share, basic and diluted

    12,000     12,000     12,000     12,000     50,069     50,069  

Non-GAAP Financial Data

                                     

Adjusted net loss(2)

    (90,180 )   (201,321 )   (133,255 )   (107,176 )   (292,395 )   (46,457 )

*
Less than RMB100.

(1)
These items include share-based compensation expenses as follows:

 
  For the Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Share-based compensation expenses included in:

                                     

Cost of revenues

    1,217     2,763     1,876     14,133     14,177     2,253  

Sales and marketing expenses

    2,066     3,918     3,492     31,025     39,475     6,272  

General and administrative expenses

    2,421     4,638     6,155     59,418     51,383     8,164  
                           

Total

    5,703     11,318     11,522     104,576     105,035     16,688  
                           
(2)
Tudou defines adjusted net loss, a non-GAAP financial measure, as net loss excluding share-based compensation expenses, beneficial conversion charges on convertible loans and fair value changes in warrant liabilities. Tudou believes adjusted net loss is useful supplemental information for investors and other interested persons to assess its operating performance without the effect of non-cash beneficial conversion charges on convertible loans and fair value changes in warrant liabilities, which will not likely be recurring factors in its business in the future, and share-based compensation expenses, which have been and will

 

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    continue to be a significant recurring factor in its business. Tudou presents this non-GAAP financial measure because its management uses this measure to evaluate its operating performance. Tudou believes that this non-GAAP financial measure provides useful information to investors and other interested persons because such information allows them to understand and evaluate its consolidated results of operations in the same manner as its management and to make period over period comparison of its financial results. However, adjusted net loss has material limitations as an analytical tool. One limitation of using non-GAAP adjusted net loss is that it does not include all items that impact its net loss for the period. In addition, because adjusted net loss may not be calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net loss in isolation from or as an alternative to net loss prepared in accordance with U.S. GAAP. For a reconciliation of adjusted net loss to net loss, please see the table below:

 
  For the Year Ended December 31,  
 
  2007   2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Net loss

    (95,884 )   (212,639 )   (144,777 )   (347,400 )   (511,162 )   (81,215 )

Add back:

                                     

Share-based compensation expenses

    5,703     11,318     11,522     104,576     105,035     16,688  

Beneficial conversion charge on convertible loan

                10,967          

Fair value changes in warrant liabilities

                124,680     113,733     18,070  
                           

Adjusted net loss

    (90,180 )   (201,321 )   (133,255 )   (107,176 )   (292,395 )   (46,457 )
                           

            The following table presents a summary of Tudou's selected consolidated balance sheet data as of December 31, 2008, 2009, 2010 and 2011:

 
  As of December 31,  
 
  2008   2009   2010   2011  
 
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Selected Consolidated Balance Sheet Data:

                               

Cash and cash equivalents

    260,769     62,034     263,151     872,001     138,547  

Restricted cash

            66,227     96,787     15,378  

Short term investments

    11,312     84,212     5,837          

Total current assets

    303,479     223,511     614,182     1,299,156     206,415  

Total assets

    339,699     263,003     698,742     1,692,492     268,910  

Total current liabilities

    51,865     119,946     418,359     478,392     76,009  

Total liabilities

    51,865     119,946     572,399     478,392     76,009  

Mezzanine equity:

                               

Series A redeemable convertible preferred shares

    5,909     6,757     7,381          

Series B redeemable convertible preferred shares

    58,094     58,040     56,293          

Series C redeemable convertible preferred shares

    129,857     129,736     125,831          

Series D redeemable convertible preferred shares

    388,205     387,842     376,169          

Series E redeemable convertible preferred shares

            351,402          

Accumulated deficit

    (294,328 )   (439,414 )   (801,797 )   (1,327,844 )   (210,973 )

Total shareholders' equity/(deficit)

    (294,231 )   (439,317 )   (790,733 )   1,214,100     192,901  

Total liabilities and shareholders' equity/(deficit)

    339,699     263,003     698,742     1,692,492     268,910  

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

        Youku will acquire all of the outstanding Tudou shares and share options to purchase ordinary shares of Tudou in a stock-for-stock transaction announced on March 12, 2012. The accompanying unaudited pro forma condensed combined balance sheet (the "Pro Forma Balance Sheet") as of December 31, 2011 combines the historical consolidated balance sheets of Youku and Tudou, giving effect to the Merger as if it had been completed on December 31, 2011. The accompanying unaudited pro forma condensed combined statement of operations (the "Pro Forma Statement of Operations") for the year ended December 31, 2011 combines the historical consolidated statements of operations of Youku and Tudou, giving effect to the Merger as if it had been completed on January 1, 2011.

        The accompanying unaudited pro forma condensed combined financial statements (the "Statements") and related notes were prepared using the acquisition method of accounting with Youku considered the acquirer of Tudou. Accordingly, the purchase consideration to be paid in the Merger has been preliminarily allocated to the assets acquired and liabilities assumed of Tudou based upon their estimated fair values as of December 31, 2011. Any amount of the purchase consideration that is in excess of the estimated fair values of the assets acquired and liabilities assumed will be recorded as goodwill in Youku's balance sheet after the completion of the Merger. As of the date of this joint proxy statement/prospectus, Youku has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the Tudou assets to be acquired and the liabilities to be assumed and the related allocation of purchase price, nor has it identified all adjustments necessary to conform Tudou's accounting policies to Youku's accounting policies. A third party firm has assisted Youku management in assessing the fair value of certain intangible assets and fixed assets of Tudou. A final determination of the fair value of Tudou's assets and liabilities will be based on the actual net tangible and intangible assets and liabilities of Tudou that exist as of the date of completion of the Merger and, therefore, cannot be made prior to that date. Additionally, the purchase consideration to be paid by Youku to complete the Merger will be determined based on the trading price of Youku ADSs at the time of the completion of the Merger. Accordingly, the accompanying unaudited pro forma purchase price allocation is preliminary and is subject to further adjustments as additional information becomes available and as additional analyses are performed. The preliminary unaudited pro forma purchase price allocation has been made solely for the purpose of preparing the Statements presented below. Youku estimated the fair value of Tudou's assets and liabilities based on discussions with Tudou's management, due diligence review in connection with the Merger, and information available to Youku in public filings. Until the Merger is completed, both companies are limited in their ability to share information with each other. Upon completion of the Merger, valuation work will be performed. Increases or decreases in the fair value of relevant balance sheet amounts will result in adjustments to the balance sheet and/or statements of operations until the purchase price allocation is finalized. There can be no assurance that such finalization will not result in material changes from the preliminary purchase price allocation included in the Statements.

        Youku expects to incur significant costs and achieve significant revenue and other synergies in connection with integrating the operations of Youku and Tudou. The Statements do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies, or any revenue, tax, or other synergies expected to result from the Merger. The Statements and related notes are being provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated balance sheet of Youku would have been had the Merger occurred on the dates assumed, nor are they necessarily indicative of Youku's future consolidated results of operations or consolidated balance sheet. The Statements are based upon currently available information and estimates and assumptions that Youku's management believe are reasonable as of the date of this joint proxy statement/prospectus. Any of the factors underlying these estimates and assumptions may change or prove to be materially different, and the estimates and assumptions may not be representative of facts existing at the closing date of the Merger.

 

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        The Statements have been developed from and should be read in conjunction with the audited historical consolidated financial statements of Youku and Tudou. Youku's audited historical consolidated financial statements for the three years ended December 31, 2011 and as of December 31, 2010 and 2011 are contained in the Youku's 2011 20-F, which is incorporated by reference into this joint proxy statement/prospectus. Tudou's audited historical consolidated financial statements for the three years ended December 31, 2011 and as of December 31, 2010 and 2011 are included elsewhere in this joint proxy statement/prospectus. The historical consolidated financial statements of Tudou have been adjusted by condensing or disaggregating certain line items in order to conform with Youku's financial statement presentation. The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.


Unaudited Pro Forma Condensed Combined Statement of Operations

 
  For the year ended December 31, 2011  
 
  Historical
Youku
(Audited)
RMB
  Historical
Tudou
(Audited)
RMB
  Pro Forma
Adjustments
(Unaudited)
RMB
  Pro Forma
Combined
(Unaudited)
RMB
  Pro Forma
Combined
(Unaudited)
US$(1)
 
 
  (in thousands, except share and per share amounts)
 

Net revenues

    897,624     512,195     60,418   (a)   1,470,237     233,597  

Cost of revenues

    (697,337 )   (427,842 )   (67,212) (b)   (1,192,391 )   (189,452 )
                       

Gross profit

    200,287     84,353     (6,794 )   277,846     44,145  

Product development expenses

    (72,573 )       (44,103) (c)   (116,676 )   (18,538 )

Sales and marketing expenses

    (230,475 )   (286,848 )   54,389   (d)   (462,934 )   (73,553 )

General and administrative expenses

    (80,529 )   (174,971 )   37,998   (e)   (217,502 )   (34,558 )
                       

Loss from operations

    (183,290 )   (377,466 )   41,490     (519,266 )   (82,504 )

Interest income

    23,693     428           24,121     3,832  

Interest expense

    (6,825 )   (4,771 )         (11,596 )   (1,842 )

Change in fair value of warrant liability

        (113,733 )         (113,733 )   (18,070 )

Others, net

    (5,682 )   (15,620 )         (21,302 )   (3,385 )
                       

Loss before income taxes

    (172,104 )   (511,162 )   41,490     (641,776 )   (101,969 )

Income taxes

                       
                       

Net loss

    (172,104 )   (511,162 )   41,490     (641,776 )   (101,969 )

Accretion and effect of foreign exchange movement on preferred shares

        (14,885 )       (14,885 )   (2,365 )
                       

Net loss attributable to ordinary shareholders

    (172,104 )   (526,047 )   41,490     (656,661 )   (104,334 )

Net loss per share, basic and diluted

    (0.09 )   (10.51 )         (0.23 )   (0.04 )

Shares used in computation, basic and diluted

    1,992,923,515     50,069,321     814,075,022   (f)   2,806,998,537     2,806,998,537  

 

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Unaudited Pro Forma Condensed Combined Statement of Financial Position

 
  December 31, 2011  
 
  Historical
Youku
(Audited)
RMB
  Historical
Tudou
(Audited)
RMB
  Pro Forma
Adjustments
(Unaudited)
RMB
   
  Pro Forma
Combined
(Unaudited)
RMB
  Pro Forma
Combined
(Unaudited)
US$(1)
 
 
  (in thousands, except per share amounts)
 

ASSETS

                                     

Current assets:

                                     

Cash and cash equivalents

    2,292,538     872,000     (21,270 )   (g)     3,143,268     499,415  

Restricted cash

        96,787                 96,787     15,378  

Short-term investments

    1,400,858                     1,400,858     222,574  

Accounts receivable, net

    420,706     239,804                 660,510     104,944  

Content licensed

        64,461     (64,461 )   (h)          

Intangible assets, net

    16,078         64,461     (h)     80,539     12,796  

Amounts due from related party

    768                     768     122  

Capitalized content production costs

        8,215     (8,215 )   (i)          

Prepayments and other assets

    16,832     17,889                 34,721     5,517  
                             

Total current assets

    4,147,780     1,299,156     (29,485 )         5,417,451     860,746  

Non-current assets:

                                     

Property and equipment, net

    96,567     88,788     4,026     (j)     189,381     30,090  

Long-term investment in related party

    1,707                     1,707     271  

Content licensed

        141,404     (141,404 )   (h)          

Intangible assets, net

    211,978     6,183     1,389,713     (h)     1,607,874     255,466  

Capitalized content production costs

    7,782         10,100     (i)     17,882     2,841  

Goodwill

            5,198,508     (k)     5,198,508     825,960  

Amounts due from related party

    65,352                     65,352     10,383  

Prepayments and other assets

    144,392     156,962     (10,000 )   (l)     291,354     46,292  
                             

Total non-current assets

    527,778     393,337     6,450,943           7,372,058     1,171,303  
                             

TOTAL ASSETS

    4,675,558     1,692,493     6,421,458           12,789,509     2,032,049  
                             

LIABILITIES AND SHAREHOLDERS' EQUITY

                                     

Current liabilities:

                                     

Accounts payable

    57,276     126,643                 183,919     29,222  

Advances from customers

    3,140                     3,140     499  

Amounts due to related party

    2,794                     2,794     444  

Accrued expenses and other liabilities

    390,607     268,405                 659,012     104,706  

Current portion of long-term debt

    9,182                     9,182     1,459  

Short-term loan

        83,344                 83,344     13,242  
                             

Total current liabilities

    462,999     478,392                 941,391     149,572  

Long-term debt

    7,382                     7,382     1,173  

Deferred tax liability

            313,555     (m)     313,555     49,819  
                             

Total liabilities

    470,381     478,392     313,555           1,262,328     200,564  

Total shareholders' equity

   
4,205,177
   
1,214,101
   
6,107,903
   
(n)
   
11,527,181
   
1,831,485
 
                             

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

    4,675,558     1,692,493     6,421,458           12,789,509     2,032,049  
                             

(1)
The reporting currency of Youku is Renminbi, but for the convenience of the reader, the amounts presented throughout the Statements are in US dollars. Unless otherwise noted, all conversions from RMB to US$ are made at a rate of RMB6.2939 to US$1.00, the effective noon buying rate as of December 30, 2011 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

 

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Notes To Unaudited Pro Forma Condensed Combined Financial Statements

Note 1. Description of The Transaction

        On March 11, 2012, Youku and Tudou signed the Merger Agreement for Tudou to combine with Youku in a 100% stock-for-stock transaction. Under the terms of the Merger Agreement, each Tudou Class A share and Class B share issued and outstanding immediately prior to the effective time of the Merger will be cancelled in exchange for the right to receive 7.177 Youku Class A shares, and each Tudou ADS will be surrendered in exchange for the right to receive 1.595 Youku ADS, which will result in Youku shareholders and ADS holders owning approximately 71.5% of the combined entity upon completion of the Merger and Tudou shareholders and ADS holders owning approximately 28.5%. Upon completion of the Merger, the combined entity will be named "Youku Tudou Inc." Youku's ADSs will continue to be listed on the NYSE under the symbol "YOKU".

Note 2. Basis of Pro Forma Presentation

        The Statements have been derived from the audited historical consolidated financial statements of Youku and Tudou. Certain financial statement line items included in Tudou's historical presentation have been disaggregated or condensed to conform to corresponding financial statement line items included in Youku's historical presentation. These include: business taxes, share based compensation expenses, selling and general administrative expenses relating to product development, professional content licensed, and intangible assets related to purchased software.

        Additionally, based on Youku's review of Tudou's publicly disclosed summary of significant accounting policies and preliminary discussions with Tudou management, the nature and amount of any adjustments to the historical financial statements of Tudou to conform its accounting policies to those of Youku are not expected to be material. Prior to and following the completion of the Merger, further review of Tudou's accounting policies and financial statements may result in revisions to Tudou's policies and classifications to conform to those of Youku, which could have a material impact on Youku's actual future financial condition and results of operations as compared to the Pro Forma Balance Sheet and Pro Forma Statement of Operations included in this joint proxy statement/prospectus.

        The Merger is reflected in the Statements as an acquisition of Tudou by Youku using the acquisition method of accounting in accordance with business combination accounting guidance under U.S. GAAP. Under these accounting standards, the total estimated purchase price will be calculated as described in Note 3 to the Statements, and the assets acquired and the liabilities assumed will be measured at estimated fair value. For the purpose of measuring the estimated fair value of the assets acquired and liabilities assumed, Youku has applied the accounting guidance under U.S. GAAP for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The fair value measurements utilize estimates based on key assumptions in connection with the Merger, including historical and current market data. The unaudited pro forma adjustments included in this joint proxy statement/prospectus are preliminary and will be revised at the effective time of the Merger as additional information becomes available and as valuation work is performed. The final purchase price allocation will be determined after the completion of the Merger, and the final allocations may differ materially from those presented.

Note 3. Estimate of Consideration Expected To Be Transferred

        Based on a Youku ADS price of US$24.78, the closing price of the Youku ADSs on the NYSE on April 13, 2012 (the most recent practicable date), and the number of Tudou shares and Tudou share options to purchase Tudou shares outstanding at December 31, 2011, the total dollar value of the

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Note 3. Estimate of Consideration Expected To Be Transferred (Continued)

merger consideration to be delivered to all Tudou shareholders and ADS holders in the Merger would have been approximately RMB7.3 billion (US$1.2 billion). Changes in Youku ADS price, or the number of Tudou shares and Tudou share options to purchase Tudou shares at the closing of the Merger could result in material differences in the purchase consideration and, thus, the purchase price and related purchase price allocation.

        The following is a preliminary estimate of the total dollar value of the merger consideration to be delivered to all Tudou shareholders and ADS holders in the Merger:

 
  RMB   US$  
 
  (In thousands)
 

To Tudou shareholders*

    7,053,636     1,120,710  
           

To holders of outstanding Tudou share options**

    289,638     46,019  
           

Total consideration

    7,343,274     1,166,729  
           

*
The estimated fair value of Youku shares issued to Tudou shareholders is based on the closing price of Youku ADS on the NYSE on April 13, 2012.
**
Youku will issue the replacement share options. These options have a preliminarily estimated fair value of RMB334.5 million (US$53.1 million), RMB289.6 million (US$46.0 million) of which is attributable to pre-combination services and included as component of the consideration to be transferred in the Merger.

        The above estimate does not purport to represent the actual value of the total purchase consideration that will be received by Tudou's shareholders and ADS holders when the Merger is completed. In accordance with U.S. GAAP, the fair value of equity securities issued as part of the Merger Consideration will be measured on the acquisition date of the Merger at the then-current market price.

        This requirement will likely result in a per ADS value component different from the US$24.78 assumed in these Statements and that difference may be material. For example, an increase or decrease of 10% in the price of Youku ADS on the acquisition date of the Merger from the price of Youku ADSs assumed in the Statement would increase or decrease the value of the purchase consideration by approximately RMB734 million (US$117 million), which would be reflected in the Statements as an equivalent increase or decrease to goodwill.

        The allocation of the preliminary purchase price to the fair values of assets to be acquired and liabilities to be assumed in the Merger includes unaudited pro forma adjustments to reflect the expected fair values of Tudou's assets and liabilities as of December 31, 2011. The allocation of the preliminary purchase price is as follows:

 
  RMB   US$  
 
  (In thousands)
 

Total tangible assets acquired

    1,462,230     232,325  

Total intangible assets acquired

    1,474,483     234,272  

Goodwill

    5,198,508     825,960  

Total liabilities assumed

    (791,947 )   (125,828 )
           

Total estimated purchase consideration

    7,343,274     1,166,729  
           

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Note 3. Estimate of Consideration Expected To Be Transferred (Continued)

        No assurances can be provided as to the actual purchase price to be paid by Youku, the fair value of the assets to be acquired or the liabilities to be assumed in the Merger, or as to the final allocations of the purchase price. Any differences from those presented in the Statements could be material.

Note 4. Adjustments To Unaudited Pro Forma Condensed Combined Financial Statements

Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations

(a)   Business taxes

        The historical net revenues of Tudou for the year ended December 31, 2011 were recorded net of business taxes. The adjustment of RMB60.4 million was to record Tudou's business taxes in revenue and cost of revenues to conform to Youku's presentation.

(b)   Cost of revenues

        Adjustments to cost of revenues for the year ended December 31, 2011:

 
  RMB   US$  
 
  (In thousands)
 

To adjust amortization expense for newly identified intangible assets

    (10,267 )   (1,631 )

To adjust share-based compensation expense of assumed Tudou options

    2,434     387  

To reclassify business tax to cost of revenues

    (60,418 )   (9,599 )

To reduce amortization expense to reflect the lower basis of acquired licensed contents

    2,925     465  

To increase amortization expense to reflect the higher basis of acquired capitalized content production costs

    (1,886 )   (299 )
           

    (67,212 )   (10,677 )
           

(c)   Product development expenses

        Adjustments to product development expenses for the year ended December 31, 2011:

 
  RMB   US$  
 
  (In thousands)
 

To adjust amortization expense for newly identified intangible assets

    (4,671 )   (742 )

To adjust share-based compensation expense of assumed Tudou options

    (1,072 )   (170 )

To reclassify certain sales and marketing expense to product development expenses to conform to Youku's presentation

    (38,360 )   (6,095 )
           

    (44,103 )   (7,007 )
           

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Note 4. Adjustments To Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

(d)   Sales and marketing expenses

        Adjustments to sales and marketing expenses for the year ended December 31, 2011:

 
  RMB   US$  
 
  (In thousands)
 

To adjust share-based compensation expense of assumed Tudou options

    16,029     2,547  

To reclassify certain sales and marketing expense to product development expenses to conform to Youku's presentation

    38,360     6,095  
           

    54,389     8,642  
           

(e)   General and administrative expenses

        Adjustments to general and administrative expenses for the year ended December 31, 2011:

 
  RMB   US$  
 
  (In thousands)
 

To adjust amortization expense for newly identified intangible assets

    (11,307 )   (1,797 )

To adjust share-based compensation expense of assumed Tudou options

    49,305     7,834  
           

    37,998     6,037  
           

(f)    Shares outstanding

        The unaudited pro forma adjustment reflects the issuance of approximately 814.1 million Youku Class A shares at the effective time of the Merger.

        The unaudited pro forma weighted average number of basic shares outstanding is calculated by adding Youku's weighted average number of basic shares outstanding for the period and the number of Youku shares expected to be issued to Tudou shareholders of approximately 814.1 million in the Merger. The unaudited pro forma weighted average number of diluted shares outstanding is calculated by adding Youku's weighted average number of diluted shares outstanding for the period and the number of Youku Class A shares expected to be issued in the Merger. Each outstanding option to acquire Tudou shares issued under any of Tudou's share incentive plans, whether or not then vested or exercisable, will be cancelled and terminated at the effective time of the Merger in exchange for the right receive 7.177 Youku Class A shares.

(g)   Cash and cash equivalents

        The unaudited pro forma adjustment reflects a decrease in cash of RMB21.3 million for the estimated transaction-related costs.

(h)   Content licensed and intangible assets

        The unaudited pro forma adjustment amount represents the reclassification of content licensed to intangible assets to conform with Youku's presentation and RMB1,257 million (US$200 million) to recognize the newly identified and the step-up to the preliminary estimated fair value of Tudou's identifiable intangible assets of approximately RMB205.9 million (US$32.7 million) as of December 31,

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Note 4. Adjustments To Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

2011. The adjustment also reflects a reclassification of purchased software licenses included in intangible assets to fixed assets to conform with Youku's presentation. The newly identified intangible assets primarily consist of domain name, trademarks and online video licenses of RMB1,145 million (US$182 million), technology of RMB32.7 million (US$5.2 million), customer relationships of RMB37.7 million (US$6.0 million), and user-generated content of RMB30.8 million (US$4.9 million). The domain name, trademarks and online video licenses are expected to be indefinite-lived intangible assets. The estimated fair value of the amortizable intangible assets is expected to be amortized on a straight-line basis over estimated useful lives that generally range from 1 to 7 years, subject to the finalization of the purchase price allocation.

(i)    Capitalized content production costs

        To record the increased fair value of capitalized content production costs and to reclassify content production costs to non-current assets to conform to Youku's presentation.

(j)    Property and equipment

        The unaudited pro forma adjustment amount represents reclassification of purchased software licenses included in intangible assets to fixed assets to conform with Youku's presentation.

(k)   Goodwill

        Goodwill reflects the preliminary estimate of the excess of the purchase price to be paid by Youku over the fair value of Tudou's identifiable assets to be acquired and liabilities to be assumed in the Merger (Note 3).

(l)    Other noncurrent assets

        The unaudited pro forma adjustment reflects RMB10 million (US$1.6 million) valuation reserve against Tudou's other receivable from Tudou's revenue sharing program. Subsequent to the issuance of its consolidated financial statements, Tudou's management expects that the program will be terminated in the near future. Therefore, the deposit of revenue sharing program of RMB10 million is not expected to be recoverable.

(m)  Deferred income tax liabilities

        The unaudited pro forma adjustment reflects the change in net deferred income taxes arising from fair value adjustments to Tudou's assets to be acquired and liabilities to be assumed by Youku in the Merger. Deferred income taxes arising from the estimated fair value adjustments related to Tudou's identifiable intangible assets have been calculated based on Tudou' statutory tax rate of 25%.

(n)   Shareholders' equity

        The unaudited pro forma adjustment reflects the expected issuance of approximately 814.1 million of Youku Class A shares at the effective time of the Merger (based upon the number of outstanding shares of Tudou as of December 31, 2011).

        In addition, accumulated deficit increased by RMB21.3 million (US$3.4 million) for estimated transaction costs. No material transaction costs had been expensed or accrued by either Youku or Tudou in the historical financial statements.

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Note 4. Adjustments To Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

        Furthermore, the unaudited pro forma adjustment reflects a non-recurring item relating to the replacement of options to purchase Tudou Class B shares with options to purchase Youku Class A shares. According to Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC805"), to determine the portion of a replacement award that is part of the consideration transferred for the acquiree, the acquirer shall measure both the replacement awards granted by the acquirer and the acquiree awards as of the acquisition date in accordance with ASC 718, Compensation—Stock Compensation. The portion of the fair-value-based measure of the replacement award that is part of the consideration transferred in exchange for the acquiree equals the portion of the acquiree award that is attributable to pre-combination service. Therefore, any difference between Youku's issued replacement award and Tudou's award attributable to pre-combination service is charged to Youku's post-combination financial statements on the date of replacement, or the acquisition date. The net impact of the adjustment is nil on the unaudited pro forma balance sheet.

Note 5. Restructuring Costs Related To Post-Merger Activities

        As part of combining the two companies, Youku expects to incur restructuring costs during the year commencing with the closing of the Merger. The restructuring costs will be primarily comprised of costs associated with canceling or reducing Tudou's existing purchase commitments, equipment and services. The Statements do not reflect adjustments related to these restructuring costs as the management of Youku and Tudou are not able to estimate the amount of these costs at this time. Certain liabilities associated with these restructuring activities may be recognized in the purchase price allocation upon completion of the Merger in accordance with ASC 805, which specifies that an acquirer would recognize a liability for restructuring or exit activities associated with the target company in a business combination only if the recognition criteria in ASC 420, Exit or Disposal Cost Obligations, are met by the acquirer at the acquisition date.

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HISTORICAL AND PRO FORMA PER SHARE DATA

        The following table presents, for the year ended December 31, 2011, selected historical per share and per ADS data of Youku and Tudou, as well as similar information reflecting the combination of Youku and Tudou as if the proposed Merger had occurred on January 1, 2011 and as a result was effective for the period presented, which we refer to as "pro forma combined" information. The pro forma combined Tudou equivalent per ADS data presented below is calculated by multiplying the pro-forma consolidated per share data by the ADS Exchange Ratio of 1.595 Youku ADS.

        The pro forma combined information is derived from the unaudited pro forma condensed combined financial information as set forth in "Unaudited Pro Forma Condensed Combined Financial Information" beginning on page 43 of this joint proxy statement/prospectus and is provided for informational purposes only and is not necessarily an indication of the results that would have been achieved had the proposed Merger been completed as of the date indicated or that may be achieved by the combined company in the future. The December 31, 2011 selected comparative per share and per ADS information of Youku and Tudou set forth below has been derived from the respective audited consolidated financial statements. You should read the information in this section along with the historical consolidated financial statements of Youku and Tudou, respectively, and accompanying notes for the periods referred to above included in the documents described under "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively.

        The audited historical consolidated financial statements for Youku and Tudou have been prepared in accordance with U.S. GAAP.

 
  Year Ended
December 31, 2011
 
 
   
  Per share   Per ADS  
 
   
  (Unaudited)
 

Basic loss per share/ADS

                   

Youku historical

  US$       (0.01 )   (0.25 )

Tudou historical

  US$       (1.67 )   (6.68 )

Pro forma combined

  US$       (0.04 )   (0.67 )

Pro forma combined Tudou equivalent(1)

  US$       (0.27 )   (1.07 )

Diluted loss per share/ADS

                   

Youku historical

  US$       (0.01 )   (0.25 )

Tudou historical

  US$       (1.67 )   (6.68 )

Pro forma combined

  US$       (0.04 )   (0.67 )

Pro forma combined Tudou equivalent(1)

  US$       (0.27 )   (1.07 )

Cash Dividends per share/ADS

                   

Youku historical

  US$            

Tudou historical

  US$            

Pro forma combined(2)

  US$            

Pro forma combined Tudou equivalent(1)

  US$            

 

 
  As of
December 31, 2011
 
 
   
  Per share   Per ADS  
 
   
  (Unaudited)
 

Book value per share/ADS

                   

Youku historical

  US$       0.34     6.03  

Tudou historical

  US$       3.85     15.41  

Pro forma combined

  US$       0.65     11.74  

Pro forma combined Tudou equivalent(1)

  US$       4.68     18.73  

(1)
Tudou equivalent figures are calculated by multiplying the pro forma consolidated per share data by the Share Exchange Ratio of 7.177 and per ADS data by the ADS Exchange Ratio of 1.595 Youku ADS.

(2)
For purposes of determining the pro forma combined dividend per ADS, Youku assumed that its dividend policy would not change because of the Merger. As a result, the pro forma combined dividend per ADS amounts are identical to the Youku historical dividend per ADS amounts.

 

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RISK FACTORS

        Investing in Youku shares or Youku ADSs involves risks, some of which are related to the Merger. In considering the proposed Merger, you should carefully consider the following information about these risks, as well as the other information included in or incorporated by reference into this joint proxy statement/prospectus, including Youku's annual report for the year ended December 31, 2011 and the extensive risk factors relating to the businesses of Youku described in the Youku annual report beginning on page 5. The business of Youku as well as its financial condition or results of operations could be materially adversely affected by any of these risks, as well as other risks and uncertainties not currently known to Youku or not currently deemed to be material.

        Please see "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" on pages 252 and 253, respectively, for information on where you can find the documents Youku has filed with or furnished to the SEC and which are incorporated into this joint proxy statement/prospectus by reference.


Risks Related to the Merger and the Combined Business

The market price of the Youku ADSs may decline following the completion of the Merger or during the period of time between the Tudou AGM and the date on which Tudou shareholders and Tudou ADS holders actually receive Youku Class A shares and Youku ADSs pursuant to the Merger Agreement.

        At the effective time of the Merger, (1) each outstanding Tudou share will be converted into the right to receive fixed consideration consisting of 7.177 Youku Class A shares, and (2) each outstanding Tudou ADS will be converted into the right to receive fixed consideration consisting of 1.595 Youku ADS; provided that the Excluded Tudou Shares shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefore, and the Dissenter Shares will be cancelled for the appraised or agreed value under the Cayman Companies Law.

        In regards to the Youku Class A share and Youku ADS portion of the Merger Consideration to be delivered to Tudou shareholders and Tudou ADS holders, respectively, under the Merger Agreement, the Share Exchange Ratio of 7.177 and the ADS Exchange Ratio of 1.595 are fixed and will not be adjusted to reflect changes in the market value of Youku ADSs.

        The market price of Youku ADSs may decline at any time following the completion of the Merger if, among other reasons:

    the synergies expected by Youku and Tudou across a number of areas, including leveraging licensed content over a larger user base and realizing efficiencies in bandwidth management and other common expenses, are not achieved;

    the effect of the Merger with Tudou on the financial results of Youku is not consistent with the expectations of financial analysts or investors; or

    Tudou ADS holders sell a significant number of Youku ADSs after consummation of the Merger, or Tudou shareholders who receive Youku Class A shares under the Merger Agreement later sell a significant number of Youku ADSs in the open market.

        In addition, the market price of the Youku ADSs may fluctuate or decline during the period of time between the Tudou AGM and the date on which Tudou shareholders and Tudou ADS holders entitled to receive Youku Class A shares and Youku ADSs, respectively, pursuant to the Merger Agreement, actually receive Youku Class A shares and Youku ADSs. These fluctuations may be caused by changes in the businesses, operations, financial results and prospects of Youku and Tudou, market expectations of the likelihood that the Merger will be completed and the timing of the completion of the Merger, general market and economic conditions or other factors. At the time they cast their votes regarding the authorization and approval of the Merger Agreement, Tudou shareholders and ADS

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holders will not know the actual market value of the Youku Class A shares and Youku ADSs they will receive when the Merger is finally completed. The actual market value of the Youku Class A shares and Youku ADSs, when received by Tudou shareholders and Tudou ADS holders, will depend on the market value of those Youku Class A shares and Youku ADSs on that date. This market value may be less than the value of the Youku Class A shares and Youku ADSs at the time the Merger Agreement was signed or when the Tudou AGM is held.

Youku and Tudou may not achieve the expected benefits of the proposed Merger.

        Youku and Tudou entered into the Merger Agreement with the expectation that the proposed Merger will result in various benefits. See "The Merger—Reasons for the Merger and Recommendation of the Youku Board" and "The Merger—Reasons for the Merger and Recommendation of the Tudou Board." Some of those benefits may not be achieved or, if achieved, may not be achieved in the time frame in which they are expected. Whether these anticipated benefits are realized depends on future events and circumstances, some of which are beyond the parties' control. For example, Youku's future growth in revenues, earnings and cash flow will partly depend on future economic conditions and conditions in the Internet television industry in China. In addition, the potential synergies that Youku and Tudou anticipate due to an integration of the two companies may not be realized.

Youku and Tudou will incur transaction and integration costs in connection with the Merger.

        Youku and Tudou have incurred, and expect to continue to incur, significant costs in connection with the Merger. Youku will also incur integration costs following the completion of the Merger as Tudou's operations are integrated with Youku's operations. The synergies expected to arise from the Merger across a number of areas, including leveraging licensed content over a larger user base and realizing efficiencies in bandwidth management and other common expenses, may not be achieved in the near term or at all, and if achieved, may not be sufficient to offset the costs associated with the Merger. Unanticipated costs, or the failure to achieve such expected improvement, may have an adverse impact on the results of operations of the combined company following the completion of the Merger.

Failure to timely complete the proposed Merger could disrupt Youku's and Tudou's business plans and operations.

        Although Youku and Tudou expect to complete the Merger promptly after receiving Tudou shareholder approval and Youku shareholder approval at their respective AGMs, the transaction is subject to certain customary closing conditions. The companies' inability to complete the Merger on the expected schedule or at all would likely disrupt their operations and require the companies to revise their respective business plans, and could otherwise have a material adverse effect on each company's business and on the trading price of each company's ADSs. Moreover, if the Merger is not completed, both companies will be subject to several risks, including having to pay certain costs relating to the Merger, the possibility of one of the parties needing to pay a significant termination fee to the other party, and the management teams of Youku and Tudou having their focus diverted from pursuing other opportunities that could be beneficial to Youku or Tudou, in each case, without realizing any of the benefits that might have resulted had the Merger been completed.

Certain directors and executive officers of Tudou have agreements and arrangements that may result in their having interests in the Merger different from, or in addition to, those of Tudou shareholders generally.

        In considering the recommendation of the Tudou Board to Tudou shareholders to approve the Merger, Merger Agreement and Plan of Merger, Tudou shareholders should be aware that certain members of the Tudou Board and certain executive officers of Tudou have agreements and

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arrangements which may result in their having interests in the Merger different from, or in addition to, those of Tudou shareholders generally, including treatment of Tudou share options in the Merger for certain directors and executive officers of Tudou including Mr. Gary Wei Wang and board representation rights on the Youku Board for Mr. Gary Wei Wang and an individual appointed by GGV II Delaware L.L.C., one of the principal shareholders of Tudou. The Tudou Board was aware of these agreements and arrangements during its deliberations of the merits of the Merger and in determining to recommend that Tudou shareholders approve the Merger, Merger Agreement and Plan of Merger. Please see "The Merger—Interests of Tudou's Directors and Executive Officers in the Merger" beginning on page 122 for more information.

The unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the merger may differ materially.

        The unaudited pro forma condensed combined financial information in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Youku's actual financial condition or results of operations would have been had the Merger been completed on the dates indicated. The pro forma condensed combined financial information reflects adjustments, which are based upon preliminary estimates, to record the Tudou identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this joint proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Youku as of the date of completion of the Merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. For more information, see "Unaudited Pro Forma Condensed Combined Financial Information" beginning on page 43.


Risks Related to Tudou

Tudou has a history of net losses and negative operating cash flow and may incur net losses and negative operating cash flow in the future.

        Tudou incurred net losses of RMB144.8 million, RMB347.4 million and RMB511.2 million (US$81.2 million) in 2009, 2010 and 2011, respectively, and it may incur losses in the future. In addition, Tudou incurred negative cash flow from operations of RMB94.8 million and RMB98.8 million in 2009 and 2010, respectively. Although Tudou achieved positive cash flow from operations of RMB1.5 million (US$0.2 million) in 2011, it expects its expenses to increase as it expands its operations, primarily in connection with leasing Internet bandwidth, acquiring premium licensed content, developing and producing content in-house, and undertaking sales and marketing activities.

        Tudou's ability to achieve profitability and positive operating cash flow depends on the growth of the online video industry and the online advertising market, the acceptance of its online video content by its users, the growth of its user base, its ability to control expenses, the expansion and effectiveness of its subscription fee-based and per-clip based mobile video services, its ability to attract and retain advertisers and advertising agencies, and its ability to provide new advertising services to meet the demands of advertisers. Tudou may not be able to achieve or sustain profitability or positive operating cash flow, and if Tudou achieves positive operating cash flow, those cash flows may not be enough to satisfy its capital expenditures and other cash needs.

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Tudou is a relatively young company facing risks and uncertainties associated with operating in the rapidly developing and evolving online video industry. Its limited operating history makes evaluating its business and prospects difficult.

        Tudou launched its website in 2005. As a relatively early-stage company in the new and rapidly evolving Chinese online video industry, it faces numerous risks and uncertainties. Some of these risks relate to its ability to:

    attract a large audience by expanding its online video content library and enhancing its user experience;

    raise its brand awareness and increase its user loyalty;

    maintain and develop relationships with advertisers and advertising agencies;

    acquire premium licensed content at a commercially acceptable costs;

    offer innovative advertising services;

    maintain and develop relationships with China Mobile and other telecommunication operators to build its mobile video business;

    attract and retain qualified personnel; and

    successfully adapt its business model to changes in this new and rapidly evolving industry.

        You should consider Tudou's business and prospects in light of the risks and uncertainties it faces as a relatively early-stage company operating in a rapidly evolving market. Tudou may not be successful in addressing the risks and uncertainties listed above, which may materially adversely affect its business prospects.

Tudou faces uncertainties regarding the growth of the online video industry and user acceptance of its online video content, which could adversely affect its revenues and prospects.

        The growth of the online video industry and online advertising services from which Tudou derives most of its revenues, as well as the level of demand and market acceptance of its services, are subject to uncertainties and numerous other factors, some of which are beyond Tudou's control. These uncertainties and factors include but are not limited to:

    general economic conditions, particularly economic conditions adversely affecting consumer spending and spending on advertising;

    the growth of Internet usage and penetration in China, and the rate of any such growth;

    government regulation of the Internet industry, particularly the online video industry;

    competition between online video and traditional media formats, such as television;

    the popularity and price of online advertising services that Tudou and its competitors launch and distribute; and

    changes in user demographics, tastes and preferences.

        A decline in the popularity of online videos in general, or Tudou's website in particular, or a decline in its user base, will adversely affect its revenues and prospects.

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Tudou relies on online advertising sales for substantially all of its revenues. The online advertising market is subject to many challenges and uncertainties. If Tudou fails to retain existing advertisers or attract new advertisers for its online advertising services, its business, results of operations and prospects could be seriously harmed.

        In 2009, Tudou generated all, and in 2010 and 2011, it generated substantially all of its revenues from online advertising services. The online advertising market continues to evolve in China. Many advertisers have limited experience with the Internet as an advertising medium, have not traditionally devoted significant advertising expenditures to online advertising and may not find the Internet to be effective for promoting products and services.

        Advertising agencies also have limited experience in procuring online video advertising for advertisers. If the Internet does not become more widely accepted as a medium for advertising, Tudou's ability to increase its revenues could be negatively affected.

        Tudou's ability to generate and maintain substantial advertising revenues depends on a number of factors, many of which are beyond its control, including but not limited to:

    the development and retention of a large user base with demographics attractive to advertisers;

    the acceptance of online advertising as an effective way for advertisers to market their businesses;

    the maintenance and enhancement of its brand;

    increased competition, potential downward pressure on online advertising prices and limitations on its advertising space;

    the development of independent and reliable means of measuring traffic and verifying the effectiveness of its online advertising inventory;

    the popularity of new content and content distribution channels that it develops;

    its ability to access content that users want to view, including its ability to upload video clips; and

    its ability to achieve continued success with innovative advertising services.

        Advertisers and advertising agencies will not do business with Tudou if they believe advertising spending on Tudou's website will not generate sales to end customers, or if Tudou does not deliver advertisements in an appropriate and effective manner. In addition, third parties may develop certain technologies to block the display of advertisements and other marketing products on Tudou's website, which may in turn cause Tudou to lose advertisers and adversely affect its operating results. Moreover, changes in government policy could restrict or curtail Tudou's online advertising services. Failure to retain existing advertisers or attract new advertisers for Tudou's online marketing services could materially harm its business, results of operations and growth prospects.

Tudou's business depends on a strong brand, and if it is not able to maintain and enhance its brand, or if it fails to protect its brand against unauthorized use by third parties, its business and operating results may be harmed.

        The brand "Tudou" is one of the most recognized online video brands in China according to iResearch, and Tudou's strong brand has contributed significantly to the success and rapid growth of its business. Tudou also believes that maintaining and enhancing the "Tudou" brand is critical to increasing users and advertisers. As Tudou's market becomes increasingly competitive, maintaining and enhancing its brand will depend on its ability to retain a leading position in the online video industry in China.

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        Historically, Tudou developed its user base primarily by word-of-mouth and incurred limited brand promotion expenses. Positive user experience and media coverage in recent years have significantly enhanced its reputation and brand. Tudou has also conducted marketing and brand promotion activities in recent years, but it cannot assure you that these activities will achieve expected results. Tudou relies on trademark law, company brand name protection policies and agreements with its employees, advertisers, advertising agencies, business partners and others to protect its brand. Despite such precautions, it may be unable to prevent third parties from using its brand without authorization.

        Tudou owns 54 registered trademarks in China and is applying for 42 additional trademarks in China. In addition, Tudou and Youku have jointly applied for 21 trademark registrations in China. Tudou cannot assure you that such trademark applications will be accepted. As a result, it may be unable to prevent third parties from utilizing such brand names in relevant areas, which could materially adversely impact its brand image. Moreover, if any third party successfully registers any trademark Tudou uses, that party may challenge Tudou's use of that trademark and brand name and Tudou may face trademark infringement claims.

        Tudou regards its brand as critical to its success. Failure to maintain or enhance the recognition of the "Tudou" brand, or to protect the brand against unauthorized use by third parties, would materially adversely affect its business and results of operations. In addition, any negative publicity about Tudou or its online video content and services, whether or not true, could harm its brand image and adversely affect its business and operating results.

Tudou faces significant competition and may be unable to compete successfully against its competitors, which would materially adversely affect its business and results of operations.

        China's online video industry is competitive and Tudou faces competition from many independent online video websites, large Chinese Internet companies and major TV websites. Prior to the completion of the Merger, Youku has been one of Tudou's major competitors. In addition, large Chinese Internet companies, including Shanda Interactive Entertainment, SINA Corporation, Baidu, Inc., Sohu.com Inc., Tencent Holdings Limited, NetEase.com, Inc., Renren Inc. and/or their respective affiliates, have launched online video websites. Some of China's major TV networks, such as China Central Television, or CCTV, Phoenix Satellite TV and Hunan Satellite TV, have also launched online video websites. Moreover, Tudou potentially competes with software-based streaming video sites.

        Tudou competes with the foregoing entities on the basis of brand recognition, demographic composition of viewers, technology platform, ability to provide innovative advertising services to advertisers and advertising agencies, relationships with advertisers and advertising agencies, and advertising prices. It also competes based on its ability to source creative user-generated content, or UGC, acquire popular premium licensed content at reasonable costs and create quality content developed in-house.

        Some of Tudou's competitors have significantly greater financial resources, longer operating histories or more experience in attracting and retaining users and managing relationships with advertisers and advertising agencies. They may compete with Tudou for users, advertisers, advertising agencies and strategic content partners in a variety of ways, including by investing in content procurement and improving the features and functionality of their online video platforms. If any of Tudou's competitors provides a comparable or better user experience, Tudou's user traffic could decline significantly. Any decline in traffic could weaken Tudou's brand and result in loss of advertisers, which would materially adversely affect its results of operations.

        Tudou also faces competition from other advertising media, such as television, radio, print media, billboards and other forms of outdoor media, for a share of advertisers' marketing budgets. Large companies in China generally allocate, and will likely continue to allocate, most of their advertising budgets to traditional advertising media and only a small portion of their budgets to online advertising

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and other forms of advertising media. If these companies do not devote a larger portion of their advertising budgets to online advertising services provided by Tudou, Tudou's advertisers reduce the amount they spend on online advertising or advertising agencies do not procure Tudou's services for advertisers, Tudou's results of operations and growth prospects could be adversely affected.

Tudou has been, and expects to continue to be, exposed to intellectual property infringement and other claims in China, including claims based on content posted on its website, which could be time-consuming and costly to defend and may result in substantial damages or court orders that prevent it from providing its existing services.

        Tudou's success depends on its ability to operate its business without infringing third-party rights, including third-party intellectual property rights. Companies in the Internet, technology and media industries own and seek to obtain, patents, copyrights, trademarks and trade secrets, and are frequently involved in litigation based on allegations of infringement or other violations of intellectual property rights or related legal rights. Patents issued or pending that are held by others may cover significant aspects of Tudou's technologies, products, business methods or services. Tudou's platform is open to Internet users for uploading video clips. As a result, content posted by Tudou's users may expose Tudou to allegations by third parties of infringement of intellectual property rights, unfair competition, invasion of privacy, defamation and other violations of third-party rights.

        Pursuant to Tudou's user agreement, users agree not to use Tudou's services in a way that is illegal or obscene or that would otherwise violate generally accepted codes of ethics. Tudou's user agreement also requires that users have the right to, or the license to use, the content they upload to Tudou's website and users agree to be solely liable for all legal liabilities with respect to such content. Although Tudou has established procedures to enable copyright owners to notify Tudou of alleged infringement and has implemented a video fingerprint system to identify infringing content, given the volume of content uploaded, it is not commercially feasible to identify and remove all potentially infringing content uploaded by users.

        Third parties may take action and file claims against Tudou if they believe that certain content on its site violates their copyrights or other related legal rights. Tudou has been subject to such claims in the PRC. It was subject to a total of 119, 201 and 332 lawsuits in China for alleged copyright infringement in 2009, 2010 and 2011, respectively. Approximately 67.6% of the lawsuits filed from January 1, 2009 through December 31, 2011 were rejected by relevant PRC courts, withdrawn by the plaintiffs or settled by the parties. For those cases Tudou lost or settled, it paid damages in an aggregate amount of approximately RMB0.3 million, RMB1.5 million and RMB1.5 million (US$0.3 million) in 2009, 2010 and 2011, respectively.

        Although Tudou has established screening processes in an attempt to filter out popular movie titles featured in Chinese cinema and is implementing a video fingerprint system to identify infringing content, it may not successfully filter out all potentially infringing content uploaded by users. Therefore, Tudou anticipates that copyright infringement claims against it in the PRC will continue to arise.

        Although Tudou's license agreements with licensors of premium licensed content require that the licensors have the legal right to license such content, Tudou cannot ensure that each licensor has such authorization. If any purported licensor does not actually have authorization relating to the premium licensed content or right to license a work of authorship provided to Tudou, Tudou may be subject to claims of copyright infringement from third parties, and Tudou cannot assure that the relevant licensor will indemnify it for all losses it may incur from such claims.

        Since 2005, relevant PRC government authorities have launched annual campaigns aimed to crack down on Internet copyright infringement and piracy, which normally last for three to four months. In the past, government authorities shut down several websites engaging in copyright infringement and piracy during such campaigns. Given the large volume of content uploaded by its users, Tudou cannot

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identify and remove all potentially infringing content on its website, and it may be subject to penalties in such campaigns. In serious cases, PRC authorities could revoke the operating permits of the websites engaging in illegal activities.

        Tudou may also face litigation or administrative actions in the PRC for defamation, negligence or other injuries resulting from the content it provides or the nature of its services. Such litigation and administrative actions, regardless of merit, may be expensive and time-consuming and divert resources and management attention from Tudou's operations. Furthermore, such litigation or administrative actions may adversely affect Tudou's brand image and reputation.

Tudou is exposed to intellectual property infringement and other claims in the United States or other jurisdictions

        Although Tudou has not previously been subject to legal actions for copyright infringement in jurisdictions other than the PRC, it may be subject to such actions in the future. These other jurisdictions may impose different protections for copyrights, and the claims may result in potentially larger damage awards than have been imposed in the PRC. For example, although Tudou's operations are in the PRC and its site targets audiences in Asia, its site includes some English-language content and is accessible by users in the U.S. and elsewhere. A U.S. court may determine that such court has jurisdiction over Tudou for claims for U.S. copyrights.

        Although U.S. copyright laws, including the Digital Millennium Copyright Act (17 U.S.C. § 512), or the DMCA, provide safeguards from claims for monetary relief for copyright infringement for certain entities that host user-uploaded content and that comply with specified statutory requirements, and although Tudou has taken steps to comply with the DMCA "safe harbor" requirements, a U.S. court could conclude that such court has jurisdiction and that Tudou is not eligible for safeguards provided by the DMCA for infringement claims that occurred prior to its implementation of steps to comply with the DMCA. In addition, for infringement claims arising after Tudou's implementation of efforts to comply with DMCA safeguards, a U.S. court could conclude that Tudou has not complied with all the statutory requirements necessary to qualify for safe harbor status. As a result, Tudou could be subject to copyright infringement claims in the U.S.

        In December 2010, Tudou received a letter sent on behalf of certain American entertainment companies (Twentieth Century Fox Film Corporation, Universal City Studios LLLP, Viacom Inc., Paramount Pictures Corporation and Warner Bros. Entertainment Inc.) of alleged copyright infringement issues arising from its website. This letter did not specify any particular acts of infringement or monetary losses allegedly suffered. Tudou has entered into a copyright protection agreement with these entertainment companies to develop certain copyright protection measures, including filtering.

        In addition, Tudou has adopted procedures designed to improve its copyright protection policy and procedures, including implementing a video fingerprint system to identify infringing content on a real-time basis. Tudou has not made any provision in its audited consolidated financial statements for this U.S. copyright infringement matter. However, these entertainment companies could file a claim against Tudou. Any resulting litigation could be time consuming, costly and uncertain as to outcome. If these content owners successfully assert a claim for copyright infringement, the liability could materially affect Tudou's business, financial condition and results of operations.

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Maintaining copyright protection controls may be costly and Tudou's business may be placed at a competitive disadvantage.

        Some online video sites provide links to and host content on their websites that may infringe copyright rights or third-party rights. Tudou has developed a digital identification system that codes video clips based on audio and video components and can identify video clips with codes similar to those on its in-house "black list" of content. After receiving notice from copyright owners and licensees, Tudou typically updates its black list by adding notified copyrighted content, and removes any UGC matching the listed items. Tudou's copyright policies and user agreement prohibit users from illegally uploading copyright-protected content to its website. In addition, Tudou allocates a significant portion of its working capital to pay royalties for licensed content.

        However, none of the foregoing procedures can eliminate the risk of infringing or illegal material being posted on Tudou's website. Tudou's revenues from online advertising services may not be sufficient to offset the cost of acquiring legally licensed content. At the same time, Tudou's competitors may be able to derive revenues from illegal content that requires little or no royalty payment. Tudou's business may be placed at a disadvantage compared with competitors that incur lower operating expenses by offering illegal content or not monitoring their websites for such content.

Tudou may not be able to adequately protect its intellectual property rights, and any failure to protect its intellectual property rights could adversely affect its revenues and competitive position.

        Tudou believes that trademarks, trade secrets, patents, copyrights and other intellectual property it uses are important to its business. Tudou relies on a combination of trademark, copyright, patent and trade secret protection laws in China and other jurisdictions, as well as confidentiality procedures and contractual provisions to protect its intellectual property. Tudou has invested significant resources in developing its intellectual property and acquiring licenses to use and distribute the intellectual property of others for its online video site. Failure to maintain or protect these rights could harm Tudou's business. In addition, any unauthorized use of Tudou's intellectual property by third parties may adversely affect its revenues and its reputation.

        The validity, enforceability and scope of protection available under intellectual property laws with respect to the Internet industry in China are uncertain and evolving. Implementation and enforcement of PRC intellectual property-related laws have historically been deficient and ineffective. Accordingly, protection of intellectual property rights in China may not be as effective as in the United States or other Western countries.

        Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and Tudou may need to resort to litigation to enforce or defend patents issued to it or its other intellectual property or to determine the enforceability, scope and validity of its proprietary rights or those of others. Such litigation and an adverse determination in any such litigation could result in substantial costs and diversion of resources and management attention.

If Tudou fails to innovate and provide high-quality online video content to attract users, it may not be able to generate sufficient user traffic to remain competitive.

        Tudou's success depends on providing online video content that enables users to have a high-quality online video viewing experience. Tudou needs to closely track evolving user tastes and preferences for online video services to maintain and grow its user base and to sell advertising services. In order to attract and retain users and compete effectively, Tudou must invest significant resources in Internet bandwidth and content and the features and functionality of its online video platform.

        Historically, Tudou has successfully encouraged its users to upload UGC that is attractive to its user base. However, it cannot assure you that it will succeed in motivating its users to upload appealing

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UGC. Furthermore, Tudou cannot assure you that its UGC support programs, such as talent development and training programs and monetary reward programs, will incentivize its UGC producers to upload popular UGC. In addition to licensing UGC, Tudou licenses premium content from third parties. If Tudou is not able to license popular premium content at commercially reasonable prices, or its desired premium content becomes exclusive to its competitors, the attractiveness of its website to users will diminish.

        Tudou also produces content in-house, and plans to invest significant resources in producing content. Since October 2010, Tudou has produced six series, including "Made for Internet" drama series, micro-movies and variety shows, which have received over 200 million video views to date. However, user tastes and preferences change quickly. If Tudou is unable to anticipate user preferences or industry changes, or if it is unable to select premium licensed content or produce in-house content to meet user tastes and preferences on a timely basis, it may lose users and its operating results may suffer. Moreover, Tudou's competitors may be able to offer a video viewing experience that is better than what it offers, forcing Tudou to expend significant resources to remain competitive.

Tudou depends on a limited number of advertisers for its revenues. Failure to maintain relationships with these advertisers may cause significant fluctuations or declines in its revenues.

        Tudou depends on a limited number of advertisers for a significant portion of its revenues. Its top 10 advertisers accounted for approximately 29.6%, 21.8% and 22.1% of its net revenues in 2009, 2010 and 2011, respectively. Tudou does not maintain long-term contracts or exclusive arrangements with advertisers, and competition for these advertisers is intense.

        Tudou cannot assure you that it can maintain its relationships with its advertisers. Tudou anticipates that its dependence on a limited number of advertisers will continue for the foreseeable future. Tudou's failure to maintain relationships with these advertisers could materially adversely affect its business, financial condition, results of operations and prospects.

Tudou relies on advertising agencies for substantially all of its sales. Its failure to maintain and enhance relationships with advertising agencies could materially adversely affect its margins. In addition, the consolidation of advertising agencies in China could increase the bargaining power of larger advertising agencies, which may adversely affect Tudou's net revenues.

        As is customary in the advertising industry in China, Tudou typically enters into advertising contracts with third-party advertising agencies. In China's advertising industry, advertising agencies typically have longstanding relationships with the advertisers they represent. Tudou intends to utilize its advertising agencies' relationships and network to increase its sales and expand its advertiser base. Tudou relies on third-party advertising agencies for substantially all of its sales to, and collection of payment from, its advertisers.

        In addition, Tudou depends on a limited number of advertising agencies for a significant portion of its revenues. Its top 10 advertising customers, which consist primarily of advertising agencies, accounted for approximately 52%, 46% and 41% of its net revenues for the years ended December 31, 2009, 2010 and 2011, respectively. Tudou does not have long-term or exclusive arrangements with these agencies, and it cannot assure you that it will maintain favorable relationships with them. In addition, if a small number of large advertising agencies were to control the online advertising market, these advertising agencies could demand higher agency fees, which could reduce Tudou's net revenues.

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The financial soundness and settlement pattern of advertisers and advertising agencies working with Tudou could affect Tudou's collection of accounts receivable, results of operations and cash flows.

        Tudou's business depends on its ability to successfully obtain payments for work performed. Tudou typically enters into advertising contracts with third-party advertising agencies and collects payments from them. It occasionally enters into advertising contracts with and collects payments from advertisers.

        Tudou generally offers credit terms of 90 days; however, actual payment terms significantly depend on settlements from advertising agencies and advertisers, which remain subject to their payment policies. As of December 31, 2009, 2010 and 2011, Tudou's accounts receivable balance net of allowance for doubtful accounts was RMB71.1 million, RMB243.0 million and RMB239.8 million (US$38.1 million), respectively. The average turnover days for Tudou's accounts receivable were 139 days in 2009, 149 days in 2010 and 132 days in 2011.

        The financial soundness of advertising agencies and advertisers working with Tudou will affect Tudou's collection of accounts receivable. Failure to collect receivables in a timely manner may adversely affect Tudou's cash flows, operations and business strategy, such as funding its expansion of Internet bandwidth capacity, procuring premium licensed content and enhancing its technology platform. Since Tudou does not require collateral or other security from advertising agencies, it establishes a provision for doubtful accounts based upon estimates, historical experience and other factors surrounding the credit risk of specific advertising agencies and advertisers.

        In 2009, 2010 and 2011, Tudou recorded RMB3.5 million, RMB7.5 million and RMB44.2 million (US$7.0 million) as an allowance for doubtful accounts, respectively. The significant increase in allowance for bad debts was primarily related to a deterioration in the financial condition of certain advertising agencies and advertisers and an increase in long aged overdue receivables. However, actual losses on client receivables balances could differ from those that Tudou anticipates, and as a result, Tudou may need to adjust its allowance, which could negatively affect its results of operations and financial condition.

        Tudou may not accurately assess the creditworthiness of advertising agencies and advertisers. Macroeconomic conditions, including turmoil in the global financial system, could also result in financial difficulties for advertising agencies and advertisers, including limited access to credit markets, insolvency or bankruptcy. These circumstances could cause advertising agencies to delay payments to Tudou, request modifications to their payment arrangements that could increase Tudou's receivables balances or default on their payment obligations to Tudou. Tudou does not expect the age of its accounts receivable to significantly improve in the foreseeable future. Any inability of advertising agencies to pay Tudou may adversely affect its results of operations and cash flows.

Tudou depends primarily on China Mobile for revenues derived from its mobile video services, and any loss or deterioration of its relationship with China Mobile may severely disrupt its mobile video services.

        Tudou relies primarily on the wireless video platforms of China Mobile for mobile video services it distributes to China Mobile's subscribers. Mobile phone users pay a monthly subscription fee or pay on a per-clip basis, and Tudou shares the fees with China Mobile. Although Tudou's agreement with China Mobile expired in November 2011, Tudou has been working with China Mobile under the same terms as in the agreement since that time. Tudou is in the process of renewing the agreement, but cannot ensure that it will be able to renew it.

        In addition, Tudou may not enter into similar arrangements with other telecommunication operators during the term of the agreement with China Mobile pursuant to the exclusivity provision under the agreement. Despite this exclusivity provision, Tudou entered into a cooperation agreement with a joint venture of China Unicom and a subsidiary of China Telecom in order to expand its mobile video services business.

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        Although Tudou believes its cooperation models with China Unicom and China Telecom are different from its agreement with China Mobile, China Mobile might deem them as events of default under its agreement with China Mobile. As a result, China Mobile could refuse to renew or terminate its cooperation agreement with Tudou and seek damages caused by any alleged breach.

        Any loss or deterioration of Tudou's relationship with China Mobile may severely disrupt Tudou's mobile video services business and the loss of this source of revenues, which Tudou regards as an important component of its growth strategy. In addition, as China Mobile is not prohibited under Tudou's cooperation agreement from working with other mobile video providers, Tudou's mobile video services may face competition and pricing pressure from other providers.

Higher Internet bandwidth costs may materially adversely affect Tudou's gross margins, business, financial condition and results of operations.

        The procurement of Internet bandwidth has historically accounted for the majority of Tudou's cost of revenues. Tudou's Internet bandwidth costs amounted to RMB74.4 million, RMB103.6 million and RMB180.2 million (US$28.6 million) in 2009, 2010 and 2011, respectively, representing 58.5%, 45.8% and 42.1% of its total cost of revenues in those respective years.

        Tudou leases Internet bandwidth from provincial subsidiaries of China Telecom and China Unicom, as well as independent third-parties that procure Internet bandwidth from telecommunication operators. The provincial subsidiaries of China Telecom and China Unicom function as independent companies, and Tudou negotiates prices separately with them or with independent third-party bandwidth vendors. Tudou expects the cost of Internet bandwidth to increase given the anticipated increase in its user traffic and its growing online video content library.

        Tudou cannot assure you that it will be able to lease sufficient bandwidth in a timely manner or on acceptable terms, if at all. Failure to do so may significantly impair the user experience on Tudou's website and decrease the effectiveness of its website to users and advertisers. In addition, if China Telecom and China Unicom centralize the pricing of Internet bandwidth, lease Internet bandwidth through competitive tender processes or otherwise increase Internet bandwidth leasing prices, Tudou's Internet bandwidth leasing costs may substantially increase, which could significantly increase its cost of revenues and materially adversely affect its gross margins, financial condition and results of operations.

If Tudou is not able to obtain premium licensed content at commercially acceptable costs, its business, financial condition and results of operations will be materially and adversely affected.

        Tudou needs to license and acquire popular video content to deliver an engaging experience for its users and present attractive advertising opportunities for advertisers. Tudou believes that popular premium licensed content will help increase its user base and overall traffic and is a critical factor in its future success. From 2007 to 2009, Tudou obtained licenses for more than 830 TV drama series and 240 movies. In 2010, it significantly increased its content procurement and obtained licenses for more than 1,360 TV drama series, 1,180 movies and 180 variety shows. In 2011, it obtained licenses for more than 660 TV drama series, 430 movies and 80 variety shows.

        In addition, through content access arrangements between Tudou and Leshi Internet Information & Technology (Beijing) Co. Ltd., or LeTV, Tudou's users have been able to access a substantial portion of LeTV's extensive content portfolio of over 680 TV episodes and 650 movies since October 2011. Tudou expects that its investment in premium licensed content will increase in the foreseeable future as it procures more premium licensed content and that its unit procurement costs, such as licensing fees for TV drama series and movies, will increase. If Tudou is unable to procure premium licensed content at commercially acceptable costs, or generate sufficient revenues to outpace the increase in market prices for premium licensed content, its business, financial condition and results of operations will be materially adversely affected.

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Tudou relies on proper operation and maintenance of its website and its network infrastructure. Any malfunction, capacity constraint or operation interruption for any extended period may adversely affect Tudou's online video business.

        The satisfactory performance, stability, security and availability of the Tudou.com site and Tudou's network infrastructure are critical to maintaining its reputation and ability to attract and retain users and advertisers. Tudou's information system provides a database of user data, advertising records, premium licensed content and other aspects of Tudou's business to assist management and help ensure effective communication among various departments and offices of Tudou. A key element of Tudou's business is to generate a high volume of user traffic on its website. Accordingly, any failure to maintain the satisfactory performance, stability, security and availability of Tudou's website and technology platform may significantly harm its reputation and ability to attract and maintain Internet users, which may affect its advertisers' interest in advertising their products and services on its site.

        From time to time, Tudou's users in certain locations have not been able to gain access to the Tudou.com site for periods lasting from several minutes to several hours, due to server interruptions, power shutdowns, Internet connection problems or other reasons. Although Tudou has not experienced an extended period of interruption in the past, a prolonged interruption may occur in the future. Any server interruptions, break-downs or system failures, whether attributable to events within or outside Tudou's control, that result in a sustained shutdown of all or a material portion of Tudou's website, could reduce the attractiveness of its product offerings.

        In addition, any substantial increase in the volume of traffic on the Tudou.com site will require Tudou to increase its investment in bandwidth and expand and upgrade its technology platform. Tudou may not be able to accurately project the rate or timing of such increases or timely expand and upgrade its systems and technology platform to accommodate such increases. Tudou's network systems are also vulnerable to damage from computer viruses, fires, floods, earthquakes, power losses, telecommunication failures, computer hacking and similar events. Tudou does not maintain insurance policies covering losses relating to its network systems or other assets. As a result, any capacity constraints or operation interruptions for any extended period may materially adversely affect Tudou's revenues and results of operations.

Tudou depends on its key personnel for the success of its business, and losing their services would severely disrupt its business.

        Tudou's future success depends upon the continued service of its key executives. If Tudou loses the services of key senior management members or other key employees, it may not be able to locate qualified replacements, and may incur additional expenses to recruit and train new personnel, which could severely disrupt its business. In addition, if any of these key executives or employees joins or forms a competing company, Tudou could lose advertisers, advertising agencies and content providers and incur additional expenses to recruit and train personnel. Each of Tudou's executive officers has entered into an employment agreement and a confidentiality, non-competition and non-solicitation agreement with Tudou. As Tudou believes is customary in its industry in China, it does not maintain key-man life insurance for any of its key executives.

        Competition for personnel in the online video and advertising industry is intense, and the availability of suitable and qualified candidates in China is limited. Competition for qualified individuals could cause Tudou to offer higher compensation and other benefits to attract and retain them, which could materially adversely affect Tudou's financial condition and results of operations. Tudou previously awarded share-based compensation, such as stock options, to its senior management and key employees. Some of the options have not yet vested. These retention awards may cease to be effective to retain Tudou's current employees once they vest.

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If Tudou fails to keep up with rapid changes in certain technologies and their impact on user behavior, its future success may be adversely affected.

        The industry in which Tudou operates is characterized by rapid technological change. Tudou's success will depend on its ability to respond to rapidly changing technologies, to adapt its services to evolving industry standards and to improve the performance and reliability of its services. Tudou's failure to adapt to these changes could harm its business. In addition, changes in user behavior resulting from technological changes may also adversely affect Tudou. For example, the number of people accessing the Internet through devices other than personal computers, including mobile phones, hand-held devices and other content delivery methods has increased in recent years. With the introduction of 3G mobile services by all three mobile carriers in China in 2009, Tudou expects this trend to continue.

        If Tudou is slow to adopt solutions and technologies compatible with new mobile networks or technologies, or if the solutions and technologies it adopts are not widely accepted and used by users of non-PC communications devices, it may not be able to capture a significant share of this increasingly important market. In addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological changes could require substantial expenditures to modify or adapt its products, services or technology platform. If Tudou fails to evolve with rapid technological changes to remain competitive, its results of operations and prospects may be adversely affected.

Undetected programming errors or flaws or failure to maintain effective customer service could harm Tudou's reputation or decrease market acceptance of its video programs, which would materially adversely affect its results of operations.

        The video programs, including advertising video programs, on Tudou's website may contain errors or flaws that may only become apparent after their release. From time to time, users have notified Tudou of programming flaws affecting their user experience, and Tudou may also detect programming flaws and errors when it monitors its video advertisements. Tudou generally has been able to resolve these flaws and errors. However, it cannot assure you that it will be able to detect and resolve programming flaws and errors in a timely manner. Undetected programming errors and defects, and any resulting unsatisfactory customer experience, could disrupt Tudou's operations, harm its reputation and cause its users and advertisers to reduce their use of its services, any of which could materially adversely affect Tudou's results of operations.

If Tudou fails to effectively manage its growth, its business, financial condition, results of operations and prospects may be materially adversely affected.

        Tudou has limited operational, administrative and financial resources, which may be inadequate to sustain its rapid growth. If Tudou's user base continues to expand, it will need to increase its investment in Internet bandwidth and its technology platform, facilities and other areas of operations, including customer service and sales and marketing. Tudou expects to procure more Internet bandwidth and premium licensed content to deliver an engaging experience for users and present attractive advertising opportunities for advertisers.

        Tudou's success will depend on, among other things, its ability to effectively maintain relationships with key advertisers, advertising agencies, content partners, mobile network operators and other strategic partners; to train, motivate and retain key employees and attract and integrate new employees; to develop and improve operational, financial, accounting and other internal systems and controls; and to maintain adequate controls and procedures to ensure that its public disclosure under applicable laws, including U.S. securities laws, is complete and accurate.

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        Tudou has experienced rapid growth and expansion that has placed significant strain on its management personnel, systems and resources. Tudou anticipates that it will need to implement new and upgraded operational and financial systems, procedures and controls, including the improvement of its accounting and other internal management systems, all of which require substantial management efforts. Tudou will also need to expand, train, manage and motivate its workforce, and manage its relationships with advertisers, advertising agencies and content providers. These efforts require substantial management effort and skills and Tudou may incur additional expenditures.

        In addition, acquisition of companies that have historical non-compliance issues may bring Tudou more risks. For example, Tudou Limited, a Hong Kong company that Tudou acquired in February 2011, failed to conduct certain corporate actions in compliance with Hong Kong law, including making certain mandatory fund contributions for its three employees. Tudou has performed a legal analysis of the acquisition with its local counsel and concluded that it is not likely that the relevant authority will penalize Tudou Limited. Tudou is not able to estimate the amount of any financial penalty, which the relevant authority has sole discretion to determine. Tudou's inability to effectively manage its growth may adversely affect its business, financial condition, results of operations and prospects.

In preparing its consolidated financial statements, Tudou identified material weaknesses and other control deficiencies in its internal control over financial reporting. If it fails to achieve or maintain an effective internal control system over financial reporting, its ability to accurately and timely report its financial results or prevent fraud may be adversely affected.

        Prior to its initial public offering in August 2011, Tudou was a private company with limited accounting personnel and other resources to address its internal controls and procedures over financial reporting. In the preparation and the external audit of its consolidated financial statements for 2008, 2009 and 2010 in connection with its initial public offering, Tudou and its independent registered public accounting firm identified certain deficiencies in its internal control over financial reporting, including material weaknesses and significant deficiency as defined in the standards established by the U.S. Public Company Accounting Oversight Board or a Auditing Standard No. 5.

        The material weaknesses were (1) the lack of sufficient resources with adequate U.S. GAAP knowledge and experience to identify, evaluate and conclude on certain accounting matters independently and (2) the lack of effective controls designed and in place to ensure the completeness and accuracy of consolidated financial statements and disclosures in accordance with U.S. GAAP, which resulted in errors mainly in recording and accounting for redeemable convertible preferred shares, share-based compensation, accrual for litigation losses, agency fees and certain balance sheet line item reclassifications. The significant deficiency related to the lack of formally documented corporate accounting policies in certain areas and the setup of accounts in accordance with U.S. GAAP.

        During the audit of its consolidated financial statements for the year ended December 31, 2011, Tudou and its independent registered public accounting firm determined that a number of control deficiencies, including the above-mentioned material weaknesses, continue to exist. Neither Tudou nor its independent registered public accounting firm undertook a comprehensive assessment of its internal controls for purposes of identifying and reporting material weaknesses and other control deficiencies in its internal control over financial reporting. In light of the number of control deficiencies identified as a result of the limited procedures performed, had Tudou performed a formal assessment of its internal control over financial reporting or had its independent registered public accounting firm performed an audit of its internal control over financial reporting, additional control deficiencies may have been identified.

        Following the identification of the material weaknesses and other control deficiencies, Tudou has taken measures to remedy these deficiencies. However, the implementation of these measures may not fully address these deficiencies in Tudou's internal control over financial reporting, and Tudou cannot

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conclude that they have been fully remedied. Tudou's failure to correct these control deficiencies or its failure to discover and address any other control deficiencies could result in inaccuracies in its financial statements and impair its ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, Tudou's business, financial condition, results of operations and prospects may be materially adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders Tudou's ability to prevent fraud.

Tudou's quarterly revenues and operating results are difficult to predict and could fall below investor expectations.

        Tudou's quarterly revenues and operating results have fluctuated in the past and may continue to fluctuate significantly depending upon a number of factors. In particular, Tudou's revenues may be affected by the seasonality of advertising spending in China. For instance, Tudou typically has slightly lower sales during the first quarter of each year primarily due to the Chinese New Year holiday in that quarter. Other factors that may affect Tudou's financial results include, among others:

    global economic conditions;

    changes in government policies or regulations, or their enforcement;

    Tudou's ability to attract and retain advertisers; and

    Tudou's ability to maintain and increase user traffic.

        In addition, Tudou expects that major non-cash items will affect its results of operations. Share-based compensation charges are the primary non-cash item that impacts its financial results and Tudou expects to continue to incur these charges in the future. Determining the amount of Tudou's share-based compensation expense requires the input of highly subjective assumptions, including the expected life of the share-based payment awards, estimated forfeitures and the price volatility of underlying shares. Some of these factors are beyond Tudou's control, making its quarterly results difficult to predict. You should not rely on Tudou's results of operations for prior quarters as an indication of its future results.

Fluctuations in exchange rates have resulted in, and are expected to continue to result in, foreign exchange losses and to adversely affect Tudou's profitability.

        Fluctuation in the value of the Renminbi may materially adversely affect Tudou's profitability. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under this policy, the PRC government allowed the Renminbi to fluctuate within a narrow and managed band against a basket of certain foreign currencies.

        For almost two years after reaching a high against the U.S. dollar in July 2008, the Renminbi traded within a narrow band against the U.S. dollar, remaining within 1% of its July 2008 high. As a consequence, the Renminbi fluctuated sharply since July 2008 against other freely traded currencies, in tandem with the U.S. dollar. In June 2010, the PRC government announced that it would increase Renminbi exchange rate flexibility and since that time the Renminbi has appreciated against the U.S. dollar. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in greater fluctuation of the Renminbi against the U.S. dollar.

        Tudou's financial statements are expressed in Renminbi, and most of Tudou's assets, revenues, costs and expenses are denominated in Renminbi. Tudou principally relies on dividends and other distributions paid to it by its subsidiaries in China. Tudou's results of operations will be affected by the

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foreign exchange rate between U.S. dollars and Renminbi. To the extent Tudou holds assets denominated in U.S. dollars, any appreciation of the Renminbi against the U.S. dollar could result in a charge to Tudou's income statement and a reduction in the value of its U.S. dollar denominated assets. On the other hand, a decline in the value of Renminbi against the U.S. dollar could reduce the U.S. dollar equivalent amounts of Tudou's financial results.

        Limited hedging transactions are available in China to reduce Tudou's exposure to exchange rate fluctuations. Tudou has not entered into any forward contracts to hedge its exposure to Renminbi-U.S. dollar exchange risk, although it bought Euros and Australian dollars in 2009 to diversify its foreign currency balances and to mitigate foreign exchange risk associated with the U.S. dollar's depreciation against the Renminbi. While Tudou may enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited, and it may not be able to successfully hedge its exposure at all. In addition, PRC exchange control regulations that restrict Tudou's ability to convert Renminbi into foreign currency may increase Tudou's currency exchange risks.

Tudou's principal shareholders, directors and executive officers own a large percentage of its shares, allowing them to exercise substantial influence over matters subject to Tudou shareholder approval, including the Merger Agreement, the Plan of Merger and the Merger to be voted upon at the Tudou AGM.

        As of March 15, 2012, Tudou's executive officers, directors and principal shareholders holding 5% or more of the outstanding Tudou shares, as well as their affiliates, own 56.4% of the total issued and outstanding Tudou shares and 64.7% of the aggregate voting power of Tudou. Accordingly, these executive officers, directors and principal shareholders have substantial influence over the outcome of corporate actions requiring shareholder approval, including the Merger Agreement, the Plan of Merger and the Merger to be voted upon at the Tudou AGM, as well as the election of directors, any other merger, consolidation or sale of all or substantially all of Tudou's assets or any other significant corporate transaction. In addition, the interests of such parties may not align with those of Tudou's other shareholders. These shareholders may also delay or prevent a change of control or otherwise discourage a potential acquirer from attempting to obtain control of Tudou, even if such a change of control would benefit Tudou's other shareholders.

        As an inducement for Youku to enter into the Merger Agreement, the Tudou Voting Shareholders entered into the Youku Voting Agreements contemporaneously with the execution and delivery of the Merger Agreement. See "The Voting Agreements—Voting Agreements between Youku and Certain Tudou Shareholders" on page 154 of this joint proxy statement/prospectus for more information. As of April 17, 2012, an aggregate of 64,977,879 Tudou shares, constituting approximately 55.8% of the total outstanding shares of Tudou and 65.3% of the voting power of Tudou, are subject to the Youku Voting Agreements. Under the Youku Voting Agreements, the Tudou Voting Shareholders have agreed, among other things, to vote all Tudou shares and Tudou ADSs beneficially owned by them in favor of the approval and authorization of the Merger, the Merger Agreement, the Plan of Merger and the other transactions contemplated by the Merger Agreement which are considered at any meeting of the Tudou shareholders

        In addition, as of April 17, 2012, excluding Tudou share options granted to them, all of Tudou's directors and executive officers that beneficially owned Tudou shares were subject to the Youku Voting Agreements. Tudou currently expects that all directors and executive officers of Tudou who beneficially own Tudou shares and are not subject to the Youku Voting Agreements will vote all of the Tudou shares they beneficially own in favor of the Merger, the Merger Agreement and the Plan of Merger because they believe that the Merger, the Merger Agreement and the Plan of Merger are in the best interests of Tudou. None of the directors or executive officers of Tudou has made a recommendation with respect to the proposed transaction other than as set forth in this joint proxy statement/prospectus.

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Tudou may need additional capital, but it may be unable to raise capital in a timely manner or on acceptable terms, or at all. Furthermore, it may sell additional equity or debt securities that may dilute its shareholders or include covenants that may restrict its operations or its ability to pay dividends.

        To grow its business and remain competitive, Tudou may require additional capital. Tudou's ability to obtain additional capital is subject to a variety of uncertainties, including:

    its future financial condition, results of operations and cash flows;

    general market conditions for capital raising activities by online video and other Internet companies; and

    economic, political and other conditions in China and internationally.

        Tudou may be unable to obtain additional capital in a timely manner or on acceptable terms or at all. In addition, Tudou's capital needs and other business reasons could require it to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could dilute its shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict Tudou's operations or its ability to pay dividends to its shareholders.

If Tudou grants employee share options, restricted shares or other equity incentives in the future, its net income could be adversely affected.

        Tudou adopted a share incentive plan in 2006, as amended and restated in 2008, 2010 and 2011, respectively. It is required to account for share-based compensation in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, topic 718, Compensation—Stock Compensation. ASC 718 requires a company to recognize, as an expense, the fair value of share options and other equity incentives to employees based on the fair value of equity awards on the date of the grant, recognizing the compensation expense over the period in which the recipient is required to provide service in exchange for the option award.

        As of December 31, 2011, options to purchase a total of 9,227,095 ordinary shares under Tudou's share incentive plan were outstanding. As a result, Tudou incurred share-based compensation expenses of RMB11.5 million, RMB104.6 million and RMB105.0 million (US$16.7 million) in 2009, 2010 and 2011, respectively. If Tudou grants more options, restricted shares or other equity incentives, it could incur significant compensation charges and its results of operations could be adversely affected.

Tudou is a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than that under U.S. law, Tudou shareholders may have less protection for their shareholder rights than they would under U.S. law.

        Tudou's corporate affairs are governed by its memorandum and articles of association, as amended and restated from time to time, the Companies Law (as amended) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Tudou's directors to Tudou under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands.

        The rights of Tudou's shareholders and the fiduciary responsibilities of its directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of

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securities laws than the United States. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.

        As a result of all of the above, public shareholders may have more difficulty in protecting their interests in response to actions taken by management, members of the board of directors or controlling shareholders than they would as shareholders of a U.S. public company.

Tudou shareholders may have difficulty enforcing judgments obtained against Tudou.

        Tudou is a Cayman Islands company and substantially all of its assets are located outside of the United States. Tudou conducts substantially all of its operations in the PRC. In addition, most of Tudou's directors and officers are nationals and residents of countries other than the United States. As a result, it may be difficult for Tudou shareholders to effect service of process upon these persons in the United States. It may also be difficult for Tudou shareholders to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against Tudou and its officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States.

        The courts of the Cayman Islands or the PRC may not recognize or enforce judgments of U.S. courts against Tudou or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. Furthermore, Cayman Islands or PRC courts may not entertain original actions brought in the Cayman Islands or the PRC against Tudou or its directors and officers predicated upon the securities laws of the United States or any state.

Tudou faces risks related to natural disasters and health epidemics in China, which could materially adversely affect its business and results of operations.

        Tudou's business could be materially adversely affected by natural disasters or the outbreak of health epidemics in China. In the last decade, the PRC has suffered health epidemics related to the outbreak of avian influenza and severe acute respiratory syndrome, or SARS. Any natural disasters or health epidemics in the PRC could materially adversely affect Tudou's business and results of operations.

The regulation of the Internet industry is new and subject to interpretation in China, and Tudou's business could be adversely affected if it is deemed to have violated applicable laws and regulations.

        The PRC government extensively regulates the Internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the Internet industry. These Internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty.

        Under regulations issued by the State Administration of Radio, Film and Television, or the SARFT, transmission of audio and visual programs online requires a SARFT license. An applicant for engaging in Internet audio-visual program services must be a state-owned entity or a state-controlled entity with full corporate capacity, and the business to be carried out by the applicant must satisfy the overall planning and guidance catalog for Internet audio-visual program services determined by SARFT.

        Neither Tudou's PRC subsidiaries nor its consolidated affiliated entities in China are state-owned or state-controlled companies, and they may not be qualified applicants for carrying out Internet audio-visual program services. However, Tudou obtained its new SARFT license in December 2011. Therefore, it is permitted to operate its online video business in China until December 2014, when its SARFT license will expire. However, Tudou cannot assure you that it will be able to renew its SARFT license in the future. Tudou's renewal application may be denied because it is not a stated-owned or state-controlled company.

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        If Tudou fails to renew its SARFT license, it will no longer be eligible to engage in transmission of audio and visual programs through the Internet, which would materially adversely affect its business. In this event, Tudou may be subject to penalties including administrative fines for operation without a SARFT license and the PRC government may order Tudou to cease transmission of audio-visual programs through the Internet and Internet information services due to the lack of a SARFT license.

        Tudou may also be required to obtain an Internet news license from the State Council News Office, or SCNO, for the dissemination of news through its website. Tudou is applying for an Internet news license. Tudou cannot assure you that it will be able to obtain one. Without a license for the dissemination of news video clips through the Internet, it may receive a warning notice from the PRC government to remove all relevant videos and to cease dissemination of news video clips. It may also be subject to administrative fines from RMB10,000 to RMB30,000, and in severe cases, as determined by the PRC government, it may be ordered to cease Internet information services. To date, Tudou has not received any warning notice or penalties from the relevant governmental authority regarding its dissemination of news through its website.

        Furthermore, each film, TV series, TV animation or academic and documentary film broadcast online in China must obtain a prior permit from SARFT. Tudou cannot assure you that each video clip of such a program on its website has obtained such a permit. Tudou may be subject to administrative penalties including warning, orders for rectification, fines and revocation of its SARFT license. In addition, it may not legally allow users to view these video clips without such a permit, and may not be able to recoup licensing costs it has paid for the clips.

        Although Tudou currently does not produce and distribute public educational video clips on its online education channel, its website contains promotion videos for educational institutions and educational information generated or placed on its website by users on its online education channel or other channels. Educational administrative authorities may require Tudou to obtain approval for distributing promotional videos and educational information. Tudou does not have approval and cannot assure you that it will be able to obtain approval if required to do so. Without approval to distribute educational videos through the Internet, Tudou may receive a warning notice from the PRC government to remove all relevant videos and cease dissemination of educational video clips, and may also be subject to administrative fines and other penalties.

        Unlike for TV dramas and reality shows broadcast on TV stations, PRC law does not specifically require approval from SARFT or its local branch for production and distribution of "Made-for-Internet" drama series and reality shows. However, in practice and on a case by case basis, SARFT or its local branch may regulate certain "Made-for-Internet" drama series and reality shows in a similar manner as it regulates TV dramas and reality shows, based on quality, time-limits, production standards and other factors. If SARFT or its local branch requires Tudou to obtain its approval for the production and distribution of "Made-for-Internet" drama series and reality shows, Tudou cannot assure you that it will be able to obtain approval in a timely manner or at all. In this event, Tudou may be subject to penalties including administrative fines for production and distribution of "Made-for-Internet" drama series and reality shows without required approval.

        New laws and regulations may be promulgated that will regulate Internet activities, including the online video industry. In addition, the evolving PRC regulatory system for the Internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, the State Council announced the establishment of a new department, the State Internet Information Office (with the involvement of the State Council Information Office, the MIIT and the Ministry of Public Security). The primary role of this new agency is to facilitate policy-making and legislative development in the Internet sector, to direct and coordinate with the relevant departments in connection with online content administration, and to deal with cross-ministry regulatory matters in relation to the Internet industry.

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        If these new laws and regulations are promulgated or any other new Internet regulatory agencies are established, additional licenses may be required for Tudou's operations. Given their uncertainties and complexities, Tudou cannot assure you that its operations comply with these laws and regulations, particularly those governing online video and advertising operations. If Tudou is found to be in violation of any existing or future PRC laws or regulations, the relevant Chinese authorities will have broad discretion in dealing with such a violation, including, without limitation, levying fines, requiring Tudou to rectify the violation in a timely manner, revoking its business license or other licenses or permits for operation, and requiring it to discontinue any portion or all of its business. Any of these actions could cause Tudou's business to suffer.

Violation of PRC laws regulating advertisement may result in penalties.

        PRC advertising laws and regulations require advertisers, advertising operators and advertising distributors, including online advertising publishers such as Tudou, to ensure that the content of the advertisements they prepare or distribute are fair and accurate and comply with applicable law. Violation of these laws or regulations may result in penalties, including fines, confiscation of advertising fees, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. For serious violations, the PRC government may force the violator to terminate its advertising operations or revoke its business license. Furthermore, advertisers, advertising operators or advertising distributors may be subject to civil liability if they infringe on the right of third parties.

        Under PRC advertising laws and regulations, Tudou must monitor the advertising content uploaded on its website. In addition, where special government review is required for specific categories of advertisements before posting, it must confirm that a review has been performed and approval has been obtained. Tudou's reputation could be harmed and its results of operations could be adversely affected if advertisements shown on its website are provided to it by advertisers or advertising agencies in violation of relevant PRC advertising laws and regulations, or if the supporting documentation and government approvals provided to it by advertisers or advertising agencies in connection with advertising content are not complete.

Regulation and censorship of information disseminated over the Internet and wireless telecommunication networks in China may adversely affect Tudou's business, and Tudou may be liable for information displayed on, retrieved from, or linked to its website.

        China has enacted regulations governing telecommunication service providers, Internet and wireless access and the distribution of news and other information. Under these regulations, Internet content providers, or ICPs, including Tudou, are prohibited from posting or displaying over the Internet or wireless networks content that, among other things, violates PRC laws and regulations, including failure to obtain required licenses and permits for such content, impairs the national dignity of China, or is obscene, superstitious, fraudulent or defamatory. When ICPs find that information falling within the above scope is transmitted on their website or is stored in their electronic bulletin service system, they must terminate the transmission of the information or delete the information immediately, keep records and report the actions to relevant authorities.

        Failure to comply with these requirements could result in the revocation of the ICP license and other required licenses and the closure of the concerned websites. The website operator may also be held liable for prohibited information displayed on, retrieved from or linked to such website. Telecommunications operators such as China Mobile, China Unicom and China Telecom also have policies prohibiting or restricting the distribution of inappropriate content. Since December 2009, the Chinese government has been increasing its efforts to crack down on inappropriate content disseminated over the Internet and wireless networks.

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        As these regulations are relatively new and subject to interpretation by the relevant authorities, Tudou may not be able to determine the type of content that could result in liability as an online and mobile video service operator. In addition, Tudou may not be able to control or restrict the content of other Internet content providers linked to or accessible through its websites, or content generated or placed on its website by its users, despite its attempt to monitor such content. To the extent that regulatory authorities find any portion of Tudou's content objectionable or requiring any license or permit that it has not obtained, they may require Tudou to limit or eliminate the dissemination of the information or otherwise curtail the content on its website, and keep records and report to relevant authorities, which may reduce user traffic. In addition, Tudou may be subject to significant penalties for violations of regulations arising from information displayed on, retrieved from or linked to its website, including a suspension or shutdown of its operations. Tudou's reputation among users, advertisers and advertising agencies may also be adversely suffer, which would materially and adversely affect Tudou's financial condition and results of operations.

Governmental control of currency conversion may limit Tudou's ability to use its operating cash flows effectively and the ability of its PRC subsidiaries to obtain financing.

        Tudou generates substantially all of its operating cash flows in Renminbi, which is not a freely convertible currency with respect to "capital account transactions," which principally includes investments and loans. Restrictions on currency conversion imposed by the PRC government may limit Tudou's ability to use operating cash flows generated in Renminbi to fund its expenditures denominated in foreign currencies or its business activities outside China, if any. Under China's foreign exchange regulations, Renminbi may be freely converted into foreign currency for payments relating to "current account transactions," which include dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. However, the PRC government could take measures to restrict access to foreign currencies for current account transactions.

        Conversion of Renminbi into foreign currencies, and of foreign currencies into Renminbi, for payments relating to "capital account transactions" generally requires the approval of the State Administration of Foreign Exchange, or the SAFE, and other relevant PRC governmental authorities. Restrictions on the convertibility of Renminbi for capital account transactions could affect the ability of Tudou's PRC subsidiaries to make investments overseas or to obtain foreign currency through debt or equity financing, including by means of loans or capital contributions from Tudou. If Tudou's PRC subsidiaries borrow foreign currency from Tudou or other foreign lenders, they must do so within approved limits that satisfy approval documentation and PRC debt-to-equity ratio requirements. Furthermore, such loans must be registered with the SAFE or its local counterpart. In practice, completing the SAFE registration process can be time consuming.

        If Tudou finances its PRC subsidiaries through additional capital contributions, the PRC Ministry of Commerce or its local counterpart must approve the amount of these capital contributions. On August 29, 2008, the SAFE promulgated Circular 142, a notice regulating the conversion by a foreign-invested company of foreign currency- denominated capital into Renminbi by restricting the use of the converted Renminbi. The notice requires that a foreign-invested company can only use Renminbi converted from the foreign currency-denominated capital within the business scope approved by the applicable governmental authority and may not use such converted Renminbi for equity investments in the PRC unless specifically permitted in its business scope or under applicable law.

        In addition, the SAFE strengthened its oversight of the flow and use of Renminbi funds converted from the foreign currency-denominated capital of a foreign-invested company. The use of such Renminbi may not change without approval from the SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used for purposes within the company's approved business scope. Violations of Circular 142 may result in severe penalties, including substantial fines set forth in the Foreign Exchange Administration Regulations.

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        Tudou cannot assure you that it will be able to complete necessary government registrations or obtain necessary government approvals on a timely basis, if at all, with respect to loans to its PRC subsidiaries or with respect to future capital contributions to its PRC subsidiaries. Failure to complete such registrations or obtain such approvals could limit Tudou's ability to capitalize or otherwise fund its PRC operations, which could materially adversely affect its liquidity and its ability to fund and expand its business.

Changes in China's economic, political or social conditions or government policies could materially adversely affect Tudou's business.

        Substantially all of Tudou's assets and operations are located in China. Accordingly, Tudou's business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China.

        The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, the government still owns a substantial portion of productive assets in China. In addition, the Chinese government plays a significant role in regulating industrial development by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

        While the Chinese economy has grown significantly over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may negatively affect Tudou. For example, Tudou's financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may result in decreased economic activity in China, which may adversely affect Tudou's business and operating results.

Uncertainties with respect to the PRC legal system could materially adversely affect Tudou.

        Tudou conducts its business primarily through its subsidiaries and consolidated affiliated entities in China. Its operations in China are governed by PRC laws and regulations. Tudou's PRC subsidiaries are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to wholly foreign-owned enterprises. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing general economic matters.

        The overall effect of the legislation has been to significantly enhance the protections afforded to various forms of foreign investments in China. However, since these laws and regulations are relatively new and the PRC legal system is rapidly evolving, the interpretation of many laws, regulations and rules is not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to Tudou.

        Even if Tudou attempts to comply with relevant laws and regulations, it may not always be able to do so due to a lack of detailed implementation rules by relevant government authorities. In addition, some government authorities (including local government authorities) may not consistently apply

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regulatory requirements issued by themselves or other PRC government authorities, making strict compliance with all regulatory requirements impractical, or in some circumstances, impossible. For example, Tudou may have to resort to administrative and court proceedings to enforce the legal protections that it enjoys by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection Tudou enjoys than in more developed legal systems.

        These uncertainties may impede Tudou's ability to enforce the contracts it has entered into with its business partners and advertising agencies. In addition, such uncertainties, including the inability to enforce Tudou's contracts, together with any development or interpretation of PRC law adverse to Tudou, could materially adversely affect Tudou's business.

        Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other developed countries. Accordingly, Tudou cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to Tudou and other foreign investors, including Tudou shareholders and Tudou ADS holders. In addition, any litigation in China may be protracted and result in substantial costs and diversion of Tudou's resources and management attention.

If the PRC government determines that the contractual arrangements that establish the structure for operating Tudou's businesses do not comply with applicable PRC laws and regulations, Tudou could be subject to severe penalties.

        Tudou is a Cayman Islands company and, as such, it is classified as a foreign enterprise under PRC laws. Tudou's PRC subsidiaries, Reshuffle Technology (Shanghai) Co., Ltd., or Reshuffle Technology, Wohong Technology (Shanghai) Co., Ltd., or Wohong Technology, and Toodou (China) Advertising Co., Ltd, or Toodou Advertising, are foreign-invested enterprises. Various regulations in China restrict or prevent foreign-invested entities from holding certain licenses required to operate Internet-related and mobile value-added service businesses, including Internet information services, online advertising and mobile value-added services.

        In light of these restrictions, Tudou relies on Quan Toodou Network Science and Technology Co., Ltd., or Quan Toodou, and its wholly-owned subsidiary, Quan Toodou Cultural Communication Co., Ltd., or Quan Toodou Cultural, to hold and maintain the licenses necessary to operate its website as well as online advertising and value-added telecommunications services in China. Tudou also relies on Shanghai Suzao Network Science and Technology Co., Ltd., or Shanghai Suzao and Chengdu Gaishi Network Science and Technology Co., Ltd., or Chengdu Gaishi to maintain its network infrastructure, which is necessary to its website operation. In addition, Tudou relies on Beijing Tixian Digital Science and Technology Co., Ltd., or Beijing Tixian, to conduct animation related business.

        Tudou does not have any equity interest in its consolidated affiliated entities, namely, Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian, but receives their economic benefits through contractual arrangements and certain corporate governance and shareholder rights arrangements. In addition, Tudou has entered into agreements with Quan Toodou, Shanghai Suzao, Chengdu Gaishi, Beijing Tixian and each of their respective shareholders which allow it to substantially control Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian.

        The Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications Business, or the Circular, issued by the Ministry of Industry and Information Technology in July 2006, reiterated the regulations on foreign investment in value-added

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telecommunications businesses, which require foreign investors to set up foreign-invested enterprises and obtain an ICP license to conduct Internet information services in China. Under the Circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the ICP license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in China.

        Furthermore, the relevant trademarks and domain names used in the value-added telecommunications business must be owned by the value-added telecommunications service provider itself or by its shareholders. The Circular further requires each ICP license holder to have the necessary facilities for its approved operations and to maintain such facilities in the regions covered by its license. In addition, value-added telecommunications service providers must maintain network and information security in accordance with PRC regulations. Due to a lack of interpretative materials from the regulator, it is unclear what impact the Circular will have on Tudou or other Chinese Internet companies that have adopted the same or similar corporate and contractual structures as Tudou's.

        In addition, the Ministry of Commerce, or the MOFCOM, promulgated the Rules of MOFCOM on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors in August 2011, or the MOFCOM Security Review Rules, to implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February 3, 2011, or Circular No. 6. According to these circulars and rules, a security review is required for mergers and acquisitions by foreign investors having "national defense and security" concerns and mergers and acquisitions by which foreign investors may acquire "de facto control" over domestic enterprises that may trigger "national security" concerns.

        When deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to security review, the MOFCOM will look into the substance and actual impact of the transaction. The MOFCOM Security Review Rules prohibit foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. There is no explicit provision or official interpretation pursuant to which Tudou's online video business would be subject to security review, and there is no requirement for foreign investors to those mergers and acquisitions already completed prior to the promulgation of Circular No. 6 to submit such transactions to MOFCOM for security review.

        Therefore, other than for Beijing Tixian, Tudou does not think it needs to submit its existing contractual arrangements with its consolidated affiliated entities to MOFCOM for security review as it had already obtained "de facto control" over its consolidated affiliated entities prior to the effectiveness of these circulars and rules. In addition, it is not clear whether Tudou is required to submit its contractual arrangements with Beijing Tixian to MOFCOM for such security review. However, as these circulars and rules are relatively new and lack of clear statutory interpretation on the implementation of the same, there is no assurance that MOFCOM will have the same view as Tudou when implementing these national security review related circulars and rules.

        In the opinion of Fangda Partners, Tudou's PRC counsel, (1) the ownership structure of Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian is in compliance with all existing PRC laws and regulations and (2) each contract under Reshuffle Technology's contractual arrangements with Quan Toodou, Shanghai Suzao, Chengdu Gaishi, Beijing Tixian and each of their respective shareholders establishing Tudou's corporate structure as described above is valid and binding and will not result in any violation of PRC laws or regulations currently in effect. However, Tudou cannot assure you that it will not be found in violation of any current or future PRC laws and regulations.

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        Tudou's PRC counsel has also advised that there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including the Circular. Accordingly, Tudou cannot assure you that the PRC regulatory authorities and courts will take a view that is consistent with the opinion of its PRC counsel. In addition, as part of the contractual arrangements described above, Reshuffle Technology entered into an equity pledge agreement with the shareholders of Chengdu Gaishi, pursuant to which these shareholders pledged their respective equity interests in Chengdu Gaishi for the benefit of Reshuffle Technology. According to the PRC Property Rights Law, such pledges will only be effective upon registration with the relevant local administration for industry and commerce. As part of the dissolution process of Chengdu Gaishi, Chengdu Gaishi de-registered the equity pledge with the local administration for industry and commerce in December 2011. Without registration of this equity pledge, Tudou cannot assure you that PRC courts will recognize such pledge if disputes arise regarding the pledged equity interest or that Reshuffle Technology's interests as pledgee will prevail over those of third parties, if any.

        If Tudou is found to be in violation of any existing or future PRC laws or regulations, including the Circular, or fails to obtain or maintain any of the required permits or approvals, the relevant regulatory authorities will have broad discretion in dealing with such violation, including levying fines, confiscating Tudou's income, revoking Reshuffle Technology, Quan Toodou, Shanghai Suzao, Chengdu Gaishi or Beijing Tixian's business license or operating licenses, requiring Tudou to restructure the relevant ownership structure or operations and to discontinue all or any portion of Tudou's business. Any of these actions could significantly disrupt Tudou's operations.

Tudou's contractual arrangements with Quan Toodou, Shanghai Suzao, Chengdu Gaishi, Beijing Tixian and their respective shareholders may not be as effective in providing control over Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian as direct ownership of these companies.

        Tudou operates its website and conducts its online video and advertising businesses as well as animation related businesses in China through Quan Toodou and its subsidiaries, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian. Tudou's contractual arrangements with Quan Toodou, Shanghai Suzao, Chengdu Gaishi, Beijing Tixian and their respective shareholders provide it with effective control over these companies. As a result of these contractual arrangements, Tudou is considered the primary beneficiary of Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian and accordingly, it consolidates the results of operations, assets and liabilities of Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian in Tudou's financial statements.

        These contractual arrangements may not be as effective in providing Tudou with control over Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian as direct ownership of these companies. In addition, Quan Toodou, Shanghai Suzao, Chengdu Gaishi, Beijing Tixian, or their respective shareholders may breach the contractual arrangements. In any such event, Tudou would have to rely on legal remedies under PRC law. These remedies may not always be effective, particularly in light of uncertainties in the PRC legal system.

The shareholders, directors and officers of Tudou's consolidated affiliated entities may have potential conflicts of interest with Tudou, which may materially adversely affect its business and financial condition.

        Each of Tudou's consolidated affiliated entities is jointly owned by its several employees, including Gary Wei Wang, its founder, chairman and chief executive officer. Conflicts of interest between these individuals' role as shareholders of its consolidated affiliated entities and their duties to Tudou may arise. In addition, several of these individuals are directors and executive officers of Tudou's consolidated affiliated entities. PRC laws provide that a director or certain members of senior management owes a fiduciary duty to the company he directs or manages. These individuals must act in good faith and in the best interests of the relevant consolidated affiliated entity and must not use their respective positions for personal gain. These laws do not require these individuals to consider Tudou's

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best interests when making decisions as a director or member of management of the relevant consolidated affiliated entities. Conflicts may arise between these individuals' fiduciary duties as directors and officers of the consolidated affiliated entities and Tudou.

        Tudou cannot assure you that when conflicts of interest arise, these individuals will act in the best interests of Tudou or that conflicts of interest will be resolved in Tudou's favor. Tudou does not currently have arrangements to address potential conflicts of interest between these individuals and Tudou and a conflict could result in these individuals as directors and officers of Tudou violating fiduciary duties owed to it. In addition, these individuals may breach or cause Tudou's consolidated affiliated entities to breach or refuse to renew the existing contractual arrangements that allow Tudou to effectively control its consolidated affiliated entities and receive economic benefits from them. If Tudou cannot resolve any conflicts of interest or disputes between itself and the shareholders of its consolidated affiliated entities, it will have to rely on legal proceedings, which could disrupt its business, and the outcome of any such legal proceedings would be uncertain.

The ineffectiveness of control over Quan Toodou that may result from a lawsuit initiated by the ex-wife of Mr. Gary Wei Wang, Tudou's founder, chairman and chief executive officer, seeking the division of 76% of the equity interest in Quan Toodou held by Mr. Wang, could significantly disrupt Tudou's business, operations and financial condition.

        The shareholders of Tudou's consolidated affiliated entities may be involved in personal disputes with third parties that may adversely affect their respective equity interests in the relevant consolidated affiliated entity and the validity or enforceability of Tudou's contractual arrangements with the relevant consolidated affiliated entity and its shareholders. The ex-wife of Mr. Gary Wei Wang, Tudou's founder, chairman and chief executive officer who holds 95% of the equity interests in Quan Toodou, initiated a lawsuit against him with a local court in Shanghai in late 2010. She claimed, among other things, for the division of 76% of the equity interests in Quan Toodou held by Mr. Wang, which she alleged formed part of the community property during their marriage.

        Tudou relies on Quan Toodou and its subsidiaries to hold and maintain the licenses necessary to operate its website as well as online advertising and value-added telecommunications services in China. Upon the plaintiff's application and as part of the conservatory measures in this lawsuit, the court issued an order, or the Asset Conservatory Notification, to impose restrictions on the transfer, dividend distribution and other disposal of 38% of the equity interests in Quan Toodou held by Mr. Wang. This lawsuit was concluded through a settlement directed by the court in June 2011 and, pursuant to a court ruling, Mr. Wang is entitled to the equity interests in any companies that are directly or indirectly held by him.

        In exchange, Mr. Wang agreed to pay the plaintiff out of his personal assets a cash amount before June 2012, which he has paid, and an additional cash amount in the event of an initial public offering, merger, acquisition, reorganization or a similar transaction of Tudou within two years after such an event, an obligation which, according to Mr. Wang, he is willing and will be able to perform. In the meantime, the court also issued an order releasing the conservatory measures imposed by the Assets Conservatory Notification. However, if Mr. Wang fails to fully perform his obligations under the court ruling, Mr. Wang's personal assets, including the equity interests in the companies that are directly or indirectly held by him, may be subject to the court's enforcement measures.

        If Mr. Wang does not fully perform his obligations for whatever reason, and if as a result of the court's enforcement measures on his equity interests in Quan Toodou, Mr. Wang must transfer a portion or all of his equity interests in Quan Toodou to his ex-wife or such equity interests are required to be sold to any third party, the proceeds of which to be paid to his ex-wife, the other existing shareholder of Quan Toodou will have a right of first refusal to purchase such equity interests from Mr. Wang. In this case, the other existing shareholder will need to obtain financing sufficient to

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exercise this right of first refusal. It is uncertain what the valuation of such equity interests would be at that time, and the court could have wide discretion in determining the valuation.

        If the other existing shareholder fails to obtain financing or otherwise fails to exercise the right of first refusal, and Mr. Wang's ex-wife or any other third party obtains any equity interests in Quan Toodou without being subject to obligations similar to Mr. Wang's obligations under these existing contractual arrangements, Tudou may have to re-negotiate with Mr. Wang's ex-wife or such other third party and request such person to become a party to the contractual arrangements with Quan Toodou. If such person does not become a party to these contractual arrangements, with such person obtaining more than one-third of the equity interests in Quan Toodou, such person may have certain protective rights, including the power to veto certain critical corporate actions of Quan Toodou, such as increases or decreases in registered capital, amendment of the articles of association, merger, division or dissolution of Quan Toodou and change of company form of Quan Toodou.

        In addition, if such person does not become a party to these contractual arrangements after obtaining more than half of the equity interests in Quan Toodou, Tudou will not be able to continue to consolidate Quan Toodou. For the years presented in this joint proxy statement/prospectus, almost 100% of Tudou's net revenues and approximately 8% to 54% of Tudou's costs were attributable to Quan Toodou (excluding the impact of the service fees paid by Quan Toodou to Reshuffle Technology pursuant to the contractual arrangements, which were eliminated during the consolidation), and Tudou expects that these costs may increase in the future. The ineffectiveness of control over Quan Toodou that may result from this lawsuit could significantly disrupt Tudou's business and financial condition, and could negatively impact Tudou's ability to execute such corporate actions.

        In addition, under certain of Tudou's business agreements entered into by Quan Toodou, such as the collaboration agreements with China Mobile and Samsung, the counterparties will have the right to terminate such agreements in the event of any significant changes in the shareholding structure or ownership of Quan Toodou. If the above litigation results in such significant changes, the relevant counterparties may terminate their agreements with Tudou.

Contractual arrangements Tudou has entered into with Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian may be subject to scrutiny by the PRC tax authorities, and a finding that Tudou or its affiliated entities owe additional taxes could reduce Tudou's net income.

        As required by applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. Tudou could face adverse tax consequences if the PRC tax authorities determine that any of the contractual arrangements between its subsidiary in China on the one hand, and Quan Toodou, Shanghai Suzao, Chengdu Gaishi and Beijing Tixian on the other, does not represent an arm's-length price and adjust Quan Toodou, Shanghai Suzao, Chengdu Gaishi or Beijing Tixian's income in the form of a transfer pricing adjustment.

        A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by Quan Toodou, Shanghai Suzao, Chengdu Gaishi or Beijing Tixian, which could in turn increase their respective tax liabilities. In addition, PRC tax authorities may impose late payment fees and other penalties on Tudou's affiliated entities for underpaid taxes. Tudou's net income may be adversely affected if its affiliated entities' tax liabilities increase or if they are subject to late payment fees or other penalties.

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The M&A Rules and other related rules establish more complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for Tudou to pursue growth through acquisitions in China.

        On August 8, 2006, six PRC regulatory authorities, including the MOFCOM, the State-owned Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC, and the SAFE, jointly issued the Regulation on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006, as amended on June 22, 2009. The M&A Rules establish procedures and requirements that could make some acquisitions of Chinese companies by foreign investors more time-consuming and complex, including requiring in some instances prior notification to or approval by the MOFCOM.

        Tudou may grow its business in part by acquiring complementary businesses in China. Complying with the requirements of the M&A Rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit Tudou's ability to complete such transactions, which could affect Tudou's ability to expand its business and maintain its market share.

        The MOFCOM Security Review Rules effective from September 1, 2011 provide that a merger or acquisition of a domestic enterprise by foreign investors is subject to security review. In addition, the principle of substance over form should be applied to such security review and foreign investors are prohibited from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. If the business of any PRC domestic target company that Tudou plans to acquire falls into the ambit of security review under the MOFCOM Security Review Rules, Tudou may not be able to pass such security review process or successfully acquire such company by either equity or asset acquisition or through a contractual arrangement.

Recent PRC regulations, particularly SAFE Circular No. 75 relating to acquisitions of PRC companies by foreign entities, may limit Tudou's ability to acquire PRC companies and adversely affect the implementation of its strategy as well as its business and prospects.

        On October 21, 2005, the SAFE issued the Circular on Several Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and in Return Investments via Overseas Special Purpose Companies, known as Circular No. 75, which became effective on November 1, 2005. Circular No. 75 and related rules provide, among other things, that prior to establishing or acquiring direct or indirect interest of an offshore company, or the Offshore SPV, for the purpose of financing that Offshore SPV with assets of, or equity interests in, an enterprise in the PRC, each PRC resident (whether a natural or legal person) holding a direct or indirect interest in the Offshore SPV must complete prescribed registration procedures with the relevant local branch of the SAFE.

        Such PRC resident must amend his SAFE registration under certain circumstances, including upon any injection of equity interests in, or assets of, a PRC enterprise to the Offshore SPV as well as any material change in the capital of the Offshore SPV, including by way of a transfer or swap of shares, merger or division, long-term equity or debt investment or the creation of any security interests in favor of third parties. Circular No. 75 applies retroactively and to indirect shareholdings.

        PRC residents who have established or acquired direct or indirect interests in any Offshore SPVs that have made onshore investments in the PRC in the past are required to complete the registration procedures by March 31, 2006. The SAFE subsequently issued relevant guidance to its local branches with respect to the operational procedures of the SAFE registration under Circular No. 75.

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        Tudou has requested PRC residents that, to Tudou's knowledge, hold direct or indirect interests in Tudou to make necessary applications, filings and amendments as required under Circular No. 75 and other related rules. However, Tudou may not know the identities of all the PRC residents holding direct or indirect interests in Tudou, and it cannot provide any assurances that these PRC residents will comply with its request to make or obtain any applicable registrations or comply with other requirements required by Circular No. 75 or other related rules.

        The failure or inability of these PRC residents to make required registrations or to comply with other requirements under Circular No. 75 and other related rules may subject such PRC residents or Tudou's PRC subsidiary to fines and legal sanctions and limit Tudou's ability to contribute additional capital into or provide loans to Tudou's PRC subsidiary and limit its PRC subsidiary's ability to pay dividends or otherwise distribute profits to Tudou.

All employee participants in Tudou's share incentive plans who are PRC citizens may be required to register with the SAFE. Tudou may also face regulatory uncertainties that could restrict its ability to adopt additional option plans for its directors and employees under PRC law.

        In December 2006, the People's Bank of China promulgated the Administrative Measures for Individual Foreign Exchange, which set forth requirements for foreign exchange transactions by PRC individuals under either the current account or the capital account. In January 2007, the SAFE issued the Implementation Rules of the Administrative Measures for Individual Foreign Exchange, which, among other things, specified approval requirements for certain capital account transactions such as a PRC citizen's participation in the employee stock ownership plans or stock option plans of an overseas publicly-listed company.

        In February 2012, the SAFE promulgated the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas-Listed Companies, or the Stock Option Rule, which terminated the Processing Guidance on Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas-Listed Companies issued by the SAFE in March 2007. Under the Stock Option Rule, PRC citizens who participate in any stock incentive plan including an employee stock option plan of an overseas-listed company are required, through a qualified PRC domestic agent or PRC subsidiary of such overseas-listed company, to register their stock options with the SAFE and complete certain other procedures.

        Tudou and its PRC citizen employees participating in its stock incentive plan are subject to the Stock Option Rule. Tudou is applying for registration of its stock incentive plan with the local branch of the SAFE in Shanghai. Failure to comply with the Stock Option Rule and other relevant rules will subject Tudou or its PRC citizen employees participating in its stock incentive plan to fines and other legal or administrative sanctions and result in restrictions on its option plans, including the grant of options under such plans to its employees, which could adversely affect its operations.

The enforcement of labor contract law and an increase in labor costs in the PRC may adversely affect Tudou's business and its profitability.

        China adopted a labor contract law and its implementation rules effective on January 1, 2008 and September 18, 2008, respectively. The labor contract law and its implementation rules impose more stringent requirements on employers with regard to, among others, minimum wages, severance payments upon permitted termination of employment by an employer and non-fixed term employment contracts, time limits for probation periods as well as the duration and the times that an employee can be placed on a fixed term employment contract. Due to the limited period of effectiveness of the labor contract law and its implementation rules and the lack of clarity with respect to their implementation and potential penalties and fines, it is uncertain how they will impact Tudou's employment policies and practices.

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        Tudou's employment policies and practices may violate the labor contract law or its implementation rules and Tudou may be subject to related penalties, fines or legal fees. Compliance with the labor contract law and its implementation rules may increase Tudou's operating expenses, in particular its personnel expenses, as the continued success of Tudou's business depends significantly on its ability to attract and retain qualified personnel. In the event that Tudou decides to terminate some of its employees or otherwise change its employment or labor practices, the labor contract law and its implementation rules may also limit its ability to effect those changes in a cost-effective or desirable manner, which could adversely affect its business and results of operations.

Tudou may be classified as a "resident enterprise" for PRC enterprise income tax purposes, which could result in unfavorable tax consequences for it and its non-PRC shareholders.

        Under the PRC Enterprise Income Tax Law, or the EIT Law, and its implementation rules, an enterprise established outside of the PRC with "de facto management bodies" within the PRC is considered a PRC resident enterprise and is subject to the enterprise income tax at the rate of 25% on its worldwide income. The rules implementing the EIT law define the term "de facto management bodies" as "establishments that carry out substantial and overall management and control over, among other things, manufacturing and other operations, personnel, accounting, properties of an enterprise."

        The State Administration for Taxation issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or SAT Circular 82, on April 22, 2009. SAT Circular 82 clarifies that dividends and other income paid by resident enterprises to shareholders that are non-PRC resident enterprises will be considered to be PRC source income, and subject to PRC withholding tax, currently at a rate of 10% unless otherwise reduced or exempted by relevant tax treaties. SAT Circular 82 also subjects such resident enterprises to reporting requirements with the PRC tax authorities. In addition, SAT Circular 82 provides certain specific criteria for determining whether the "de facto management body" is located in China for an overseas incorporated enterprise controlled by PRC enterprises or PRC enterprise groups. However, it remains unclear how the tax authorities will determine the location of "de facto management bodies" for overseas incorporated enterprises not controll