China's top two online video companies Youku Inc and Tudou Holdings Ltd on Friday announced the completion of their merger.

Analysts said that the deal will likely trigger more M&A in the sector.

Youku's name was changed to Youku Tudou Inc, signaling that Tudou has become a wholly owned subsidiary of Youku. The trading of Tudou shares on Nasdaq will also be suspended beginning on Aug 24, the joint statement said.

The acquisition will help to reduce content licensing and network costs, and generate savings of as much as $60 million each year, Bloomberg News quoted Youku as saying.

The sector is now expected to see more mergers as every website is looking for a stronger company brand and lower operation costs, said Analysys International.

"More advertising deals are set to be taken by large websites and the mid- and small-sized players are going to find it hard to survive," said Zhang Xiaoqi, an analyst at the Beijing-based firm.

The advertising revenues of the nation's online companies hit 1.9 billion yuan ($300 million) in the second quarter of the year, an increase of 20 percent compared to a year ago, data from Analysys International showed.

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