Alibaba Group Holding Ltd plans to buy all the remaining shares of mobile browser firm UCWeb in the biggest merger in Chinese Internet history.
The deal will be larger even than Baidu's $1.9 billion acquisition of 91 Wireless last year, Alibaba said.
Alibaba's is trying to do more business on mobile in the world's biggest smartphone market. But rival Tencent Holdings Ltd, China's biggest listed Internet firm, dominates smartphone screens with its mobile messaging app WeChat, a situation which Alibaba executives have publicly railed against.
"This integration will create the biggest merger in the history of China's Internet," Alibaba said on its microblog.
Alibaba already held about a 66 percent stake in UCWeb.
The e-commerce giant and UCWeb will form the UCWeb Mobile Business Group responsible for Internet browsers, search services, location-based services, the mobile gaming platform, mobile application distribution and mobile literature services, UCWeb said in a statement.
UCWeb said the mobile search service had a market share of more than 20 percent.
Alibaba is also preparing for a US initial public offering that could value the firm as high as $150 billion, according to analyst estimates.
Alibaba Group Holding Ltd also today unveiled its first online shop in the United States, looking to take on Amazon.com Inc and eBay Inc.
The website, 11main.com, will feature products in a variety of categories such as fashion and style, home and outdoor, and jewelry and watches. In addition, some of the future offerings are not available at mass merchants and other large e-commerce sites, Alibaba said.