Late last week a press release announced that Hurray! Holding (NASDAQ: HRAY), which was acquired by Shanda Interactive Entertainment Ltd.(NASDAQ: SNDA) earlier this year, will acquire Ku6.com (in Chinese), the third largest video site in China. The deal is an all-stock transaction, and Ku6 will retain its brand as a subsidiary of Hurray!

Chinese media ifeng has provided updates on details of the deal, which is estimated to be $36.98MM in value (calculated using HRAY’s $5.11 stock price and the 723MM ADS shares it will issue to finance the deal). This is notably lower thanearlier reported figures, but it’s probably a good exit regardless for Ku6, which has really fallen behind its two bigger Chinese competitors, Tudou (in Chinese) and Youku (in Chinese). According to industry estimates, Youku and Tudou command 29.5% and 29% viewership market share respectively, while Ku6 has only 5.3%.

Ku6 has announced that it will ramp up its operations, aggressively increase its headcount and also move into a new office building in 2010. In addition, current employees can convert their options into HRAY shares, a portion of which can be cashed out immediately, “which was a pleasant surprise to the employees of a 3-year old firm that is yet to make a profit”, reports ifeng.