Alibaba buys 18 percent stake in Sina's Weibo for $586 million

(Reuters) - Sina Corp, China's largest Internet portal and media website, said e-commerce company Alibaba Group has bought an 18 percent stake in its microblogging service Weibo for about $586 million, valuing Weibo at more than $3 billion.

The company has also granted Alibaba the option to increase its stake in Weibo to 30 percent 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.

The alliance is expected to generate about $380 million in advertising and social commerce services revenue for Weibo over the next three years, Sina said.