BEIJING - China's online search leader Baidu Inc. announced Tuesday it will pay $370 million to buy the online video business of 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.

Screenshots of the logo of Baidu and PPS, May 7, 2013. [Photo/Asianewsphoto]

The deal is expected to close in the second quarter.

After the acquisition, iQiyi CEO Gong Yu will remain at the helm, while PPS founder Zhang Hongyu and president Xu Weifeng will serve as co-presidents at the new entity, Baidu said.

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, but eyeing long-term advertising revenues in the booming mobile Internet sector, major market players have stepped up efforts to foster 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.

Other players in the field include Internet giant Sohu's video unit, PPTV, Letv and Funshion.