Institutional investor, Acacia Partners has criticized a proposal by Baidu, China’s leading online search company, to sell-off market-leading online video unit iQIYI.

Acacia, a U.S. hedge fund which owns a $430 million stake in Baidu, this week published a letter querying the February proposal which would see iQIYI sold for $2.8 billion to a bid consortium comprising Baidu founder Robin Li Yanhong and iQIYI founder Gong Yu. Acacia said that a sale of iQIYI would damage the reputation of Baidu, and also that the buyout proposal is “far too low.”

iQIYI was founded in 2010. Baidu has owned 80.5% of iQIYI since 2012, when it bought in to the company. Gong holds the outstanding minority.

Acacia’s letter, of which Variety has a copy, was dated Monday. It was circulated to media on Tuesday.

Baidu, which has its shares listed on NASDAQ, responded on its Chinese social media platform Tuesday, saying that it “upholds the highest standards of corporate governance and has established a special committee made up of independent directors to evaluate the iQiyi transaction.” JP Morgan is advising the committee.

Acacia said that Baidu has recently made investments in iQIYI that would be lost to Baidu if the sale goes ahead. These amounted to “a big donation by Baidu shareholders to future iQiyi shareholders… This strikes us as particularly disappointing, as Baidu shareholders will never see the benefits of this investment if you privatize our subsidiary.”

“The short-term improvement to Baidu’s earnings produced by iQiyi’s sale is trivial compared to the potential long-term value created for Baidu shareholders by owning iQiyi within Baidu,” it said.

The Chinese online video sector is highly competitive and competition for content has kept all of the major operators as loss makers. But they have quickly become highly influential media companies, often replacing conventional TV as the most watched video platform for many users, and have built colossal audiences. As major media players, they hold out the prospect of riches after either a period of consolidation or period of rights price stability. Earlier this year Alibaba paid $4.8 billion to buy up roughly 80% of Youku Tudou, which also makes claims to be the market leader.

Other significant platforms are backed by Alibaba, Tencent, LeEco, Sohu and a nationwide electronics retailer.

iQIYI recently claimed 20 million paying subscribers which would make it by far the leader in the segment. It also recently quoted April statistics from iResearch showing that 295 million people access iQIYI via its mobile app, and 360 million people use iQIYI via personal computers.

Independent financial research firm 86Research issued a report on May 2 valuing iQIYI at $5.8 billion.

Acacia’s letter also hit directly at Li. “”It is better for Baidu to be regarded as a key institution, not the extension of the pocketbook of one man,” the letter said.

Li has come under fire Baidu has emerged as the front runner to buy Silvio Berlusconi’s majority stake in Italian soccer club AC Milan. The price is understood to be in the region of Euros400 million and was reported Monday by Chinese media as $437 million.

One investment analyst this week described it as a “rich man’s folly” and “waste of money..” He argued that European soccer clubs are loss makers, unlike American football clubs.

Earlier media reports of the AC Milan purchase suggested that Li personally was leading the acquisition. Now it appears that Baidu is the buyer.