National Business Wire (Jan 2) -- Chinese search engine giant Baidu Inc. (09888.HK) on Monday announced the termination of its $3.6 billion acquisition of Joyy Inc.'s (YY.US) domestic video-based entertainment live streaming business YY Live.

A HKEX filing showed that Moon SPV Limited, a Baidu affiliate, terminated a share purchase agreement for YY Live.

Baidu said Moon would seek "to discuss with JOYY on the next steps following the termination of the share purchase agreement."

Video-based social media platform Joyy then responded that it "is seeking legal advice," and will consider all options at its disposal in response to Baidu's notice.

"There's no impact at the business level right now," said a YY Live employee.

When it comes to the future ownership of YY Live's operations, a Joyy source said, "Subject to announcement."

Back on Nov 17, 2020, Joyy and Baidu announced that they signed an agreement whereby the latter would acquire the former's YY Live, including but not limited to YY mobile app, YY.com website and PC YY, for about $3.6 billion in cash.

The day after announcing the acquisition, U.S. short seller Muddy Waters Research released a report accusing Joyy of falsifying data on revenue, profit, and paying users, and even estimating that nearly 90% of YY Live's livestreaming revenue is "fraudulent."

And on Feb. 8, 2021, Joyy said in a filing with the U.S. Securities and Exchange Commission (SEC) that the sale of YY Live to Baidu was essentially complete.

The social media platform also noted in the SEC filing that the company's audit committee, with the assistance of independent counsel, conducted a comprehensive review that concluded that the allegations and conclusions drawn in the Muddy Waters report regarding the YY Live business "were not substantiated."