China's online search leader Baidu Inc. announced on May 7 it will pay $370 million to buy the online video business PPS, in its latest attempt to grab market share in the highly competitive industry.

Baidu will integrate the PPS online video business into its own video platform iQiyi. It expects the combined entity to become China's largest online video platform by number of mobile users and video viewing time. The deal is expected to close in the second quarter of this year. The acquisition is Baidu's latest step to diversify businesses beyond its core search sector.

China's online video industry has struggled for profits due to the high cost of content. Eyeing long-term advertising revenues in the booming mobile Internet sector, major market players have stepped up efforts to develop their mobile user base despite current difficulties.

The latest deal would make iQiyi a more competent contender to industry leader Youku Tudou Inc., which was created last year through the merger of the country's two major video giants Youku and Tudou.