Yahoo Inc.’s Hong Kong unit has signed a deal to acquire a Hong Kong company that develops software and systems intended to make using the Internet easier for Chinese language speakers.

Under the terms of the deal, Yahoo Holdings (Hong Kong) Ltd. will pay up to US$120 million in cash over two years for 3721 Network Software Co. Ltd., Yahoo said in a statement Friday. The acquisition will see the company become a wholly-owned unit of Yahoo Hong Kong.

The deal will also mean collaboration between Yahoo Hong Kong and Beijing 3721 Technology Co. Ltd. The latter company, which is affiliated with the Hong Kong company purchased by Yahoo, sells Internet keywords in China which allow people to access certain Web sites by typing in keywords rather than domain names. By typing in specific names, such as those for companies and organizations, users are redirected to corresponding Web sites. Generic terms will result in users seeing a directory maintained by 3721.

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