SHANGHAI :
Tencent Makes USD2.1 Billion Pitch to Take Private Chinese Search Giant Sogou
Zhang Yushuo
DATE:  Jul 28 2020
/ SOURCE:  Yicai
Tencent Makes USD2.1 Billion Pitch to Take Private Chinese Search Giant Sogou Tencent Makes USD2.1 Billion Pitch to Take Private Chinese Search Giant Sogou

(Yicai Global) July 28 -- Tencent Holdings, which has just surpassed Facebook to become the world’s most valuable social media company, is offering USD2.1 billion to take private Chinese search engine giant Sogou. The shares of both companies rose.

Tencent has made a preliminary proposal to buyeach American depositary share it does not already own of the firm for USD9 apiece in cash, Beijing-based Sogou said yesterday, adding that it is considering the takeover offer. The offer represents a 57 percent premium on Sogou’s closing price at the end of last week.

Shares of Tencent [HKG: 0700] jumped 4.5 percent today to close at HKD543.50 (USD70.12) each, giving the company a market cap of HKD5.19 trillion (USD669.6 billion) compared with Facebook’s USD665.8 billion.Sogou [NYSE: SOGO] ended 48 percent higher at USD8.51 in New York yesterday, valuing it at USD3.31 billion. It listed in New York in November 2017.

If a deal concludes, Sogou would join a stream of Chinese technology companies seeking to delist from US exchanges in the face of stricter disclosure rules, prompted in part by an accounting scandal at Luckin Coffee and short seller Muddy Waters’ claims that online tutor GSX Techedu inflated its student headcount.

Founded in 2003, Sogou is a provider of search, input methods, browsers, and other internet products and services. It had a net loss of USD31.6 million in the first quarter on a 2 percent gain in revenue to USD257.3 million.

Sogou, which would become an indirectly owned unit of Tencent, cautioned that there is no guarantee that Tencent will make a final offer.

Tencent became Sogou’s largest shareholder with 52.3 percent of voting rights on March 31, supplanting internet and Chinese search engine heavyweight Sohu.Com, which now owns 33.8 percent and has 44.1 percent of voting rights. Sohu Chief Executive Charles Zhang has 6.4 percent and 0.9 percent, respectively, while Sogou CEO Wang Xiaochuan owns 5.5 percent and 0.7 percent.

Editor: Ben Armour

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Keywords:   Tencent,Sogou,searching engine,Sohu