China’s Tencent has made a preliminary, non-binding bid to buy New York-listed search engine operator Sogou as a component of a $2.1 billion deal, which analysts say could potentially expand its online search business.
Shenzhen-based gaming and social media giant is providing $9 in cash for each of Sogou’s unscusoned U.S. custody stock, according to an online statement that Sogou released on Tuesday. The agreement, if concluded, will make the company personal and become a wholly owned subsidiary of Tencent. Sogou’s shares rose 48% to $8.5 at the close of operations on Tuesday, valuing the Beijing-based company at $3.3 billion.
Shawn Yang, managing director of Shenzhen-based studios Company Blue Lotus Capital Advisors, said Tencent can expect the search to serve as in its Super WeChat app. The messaging platform with nearly 1.2 billion users also allows users to search for a wide variety of content, such as news and music from other sites and apps. Your mini-programs, or so-called lean apps that can be incorporated and made available on WeChat, also have product and content search features.
“If the agreement is reached, Tencent could integrate Sogou into WeChat’s research,” Yang explains. “It isimaginable that Tencent has already evaluated Sogou and is attracted to his skill and experience in technologies such as synthetic intelligence.”
A Tencent spokesperson says the company has no additional comment on the proposal, and Sogou didn’t respond to an e-mailed request for comment. In the aforementioned statement, the company says a special committee of the board is considering the proposal. Tencent is already the largest shareholder of Sogou. It owns about 39.2% of Sogou and controls more than 50% of its voting rights. Chinese media and entertainment firm Sohu owns a 33.8% stake and controls 44% of its voting right.
The proposed agreement also comes at a time of developing tensions between China and the United States. Faced with an increasingly hostile environment and imaginable repression of audits, many Chinese corporations indexed in the United States have chosen to finance channels closer to home. This year, corporations such as e-commerce site JD.com and gaming company NetEase opted for secondary listings in Hong Kong, while online gaming company Changyou was privatized in April.
I am founded in Beijing and cover the Chinese generation sector. I make a contribution to Forbes, and in the past I have been self-employed for SCMP and Nikkei. Before Beijing, I spent six
I am founded in Beijing and cover the Chinese generation sector. I make a contribution to Forbes, and in the past I have been self-employed for SCMP and Nikkei. Before Beijing, I spent six months as an intern in the Hong Kong workplace of TIME magazine. I graduated from the Medill School of Journalism, Northwestern University. Email: [email protected] Twitter: @yueyueyuewang