Chinese ecommerce giant Alibaba has bought an 18% stake in Sina’s Weibo microblogging site, for roughly $586m.
The partnership is expected to generate about $380m in advertising and social commerce services revenue for Weibo over the next three years, Sina said.
As part of the deal, which values Weibo at more than $3bn, Sina has also granted Alibaba the option to increase its stake in the social network to 30% within a stipulated time, which it did not specify.
Sina’s U.S.-listed shares jumped 17 percent to $58.85 in premarket trade on Monday.
Alibaba and Weibo will work on user account connectivity, data exchange, online payments and online marketing, Sina said in a statement.
Sina has been trying to monetize Weibo as rival Tencent Holdings’ mobile social messaging product, WeChat, cuts into the popularity of the Weibo service.
Unlisted Alibaba, controlled by Chinese internet entrepreneur Jack Ma, runs Taobao Marketplace, China’s largest e-commerce website with a consumer focus, and Alibaba.com, the country’s largest business-to-business commerce platform.
It has a business model that revolves around online advertising and subscription fees.
Alibaba’s investment in Weibo should drive web traffic to Taobao and provide more advertising revenue to Weibo.