Investing.com-- Baidu Inc's (NASDAQ: BIDU ) shares rose in Hong Kong trade on Wednesday after the company said it bought Chinese livestreaming firm YY Live from JOYY Inc (NASDAQ: YY ) for $2.1 billion.

Baidu’s Hong Kong shares (HK: 9888 ) rose as much as 3% to HK$88.65, helping underpin a 2% rise in the broader Hang Seng index.

The YY Live acquisition- which comes after Baidu dropped an earlier approach in 2024- grants the Chinese internet giant access to the fast-growing digital livestreaming market in China.

Baidu had initially offered $3.6 billion for YY Live in 2020, during the height of the COVID-19 pandemic, when stay-at-home mandates boosted video streaming demand. But the deal fell through in January last year on a lack of regulatory approvals.

China has since softened its regulatory scrutiny of the country’s internet giants, especially as Beijing moves to shore up local economic growth.

The YY Live acquisition stands to help Baidu further diversify its revenue beyond its core advertising segment, and will also help the internet giant compete better with local and international rivals such as Douyin and Bytedance.

The YY Live deal will also unlock $1.6 billion in escrow accounts for Baidu, which it had set aside as part of the 2020 deal. The company is likely to use the cash injection to further its artificial intelligence ambitions, especially amid growing optimism over China’s AI capabilities, after the release of DeepSeek in January.