A man visits the Sogou booth on the first day of the China Digital Entertainment Expo & Conference (ChinaJoy) at the Shanghai New International Exhibition Center on August 2, 2019 in Shanghai, China.
VCG | Visual China Group | fake pictures
Shares of the Chinese search engine listed on the New York Stock Exchange, Sogou, rose 48% on Monday after Tencent proposed that the firm be private.
Tencent, one of the largest technology companies in China, already owns approximately 39.2% of total issued and outstanding shares and 52.3% of Sogou’s total voting power. Tencent has proposed $ 9 cash per US Depository Action (ADS) that it does not yet own. That’s a premium of about 56.5% at the closing price of $ 5.75 for Sogou ADSs on July 24.
Sogou shares rebounded to close at $ 8.51 on Monday after Tencent’s offer, valuing the company at $ 3.31 billion.
Sohu, the parent company of Sogou, said that its board of directors “has not yet had the opportunity to review and evaluate the Proposal in detail, or to make a determination on how to respond to the Proposal or whether the proposal to acquire Sogou would result in Sohu’s best interest, as the controlling shareholder of Sogou, to approve or reject the Proposal. “
Tencent’s offer, if successful, would take Sogou private and remove him from the New York Stock Exchange (NYSE) at a time when tensions between the United States and China are mounting and threatening Chinese companies listed on Wall Street.
In May, the U.S. Senate passed a bill that could make it harder for Chinese companies to go public in the U.S.
Some Chinese companies listed in the US, such as JD.com and Alibaba, have already made secondary listings in Hong Kong.
Chinese chipmaker SMIC withdrew from the NYSE list last year and held a share sale in Shanghai in July. Sina, which is listed on Nasdaq, a social media and news company, also received a privatization offer earlier this month from a company led by its president Charles Chao.
Other Chinese companies have also decided to conduct an initial public offering at home. Alibaba’s financial technology affiliate Ant Group announced plans earlier this month for a dual listing in Shanghai and Hong Kong.
Tencent already has a relationship with Sogou. The search engine is integrated into Tencent’s hugely popular WeChat messaging app. Analysts believe the two companies can work together in more areas.
“We believe there will be more synergies between Sogou and Tencent in search and smart devices in the future,” Thomas Chong, a stock analyst at Jefferies, wrote in a note on Wednesday.
– Correction: This article has been updated to reflect that Alibaba’s financial technology affiliate is now known as Ant Group.
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