China's largest e-commerce company, Alibaba has agreed to acquire a 18 per cent stake in Sina Corporation's Weibo allowing the company to enter social media in the country.

Alibaba has said that it will invest $586 million for acquiring stake in China's most popular micro-blogging service. The acquisition of stake in Weibo will allow the company to gain access to the large user base including tens of millions of active users.

Sina has said that it is expecting to receive $380 million in advertising and social commerce revenue during the coming three years. It will combine Alibaba's e-commerce strength with Sina Weibo's user base to explore social commerce and develop marketing solutions to merchants. The deal includes a provision that will allow Alibaba to increase its Weibo stake to 30% at an unspecified date.

"We believe that the cooperation of our two robust platforms will bring unique and valuable services to Weibo users, as well as making the mobile Internet a core part of Alibaba's strategy," said Jack Ma, the chairman of Alibaba.

The deal to transfer stake values Weibo at $3.3 billion and the shares of Sina on the Nasdaq increased 10 per cent on Monday after the deal was announced.