A man call ins Sogou booth on day one of the 2019 China Digital Entertainment Expo & Conference (ChinaJoy) at Shanghai New International Expo Center on August 2, 2019 in Shanghai, China.
VCG | Visual China Gathering | Getty Images
Shares of New York-listed Chinese search engine Sogou popped 48% on Monday after Tencent sexual advanced to take the firm private.
Tencent, one of China’s biggest technology firms, already owns approximately 39.2% of the tot up issued and outstanding shares and 52.3% of the total voting power of Sogou. Tencent has proposed $9 in cash per American depositary allocation (ADS) that it does not already own. That is a premium of around 56.5% to the $5.75 closing price of Sogou’s ADSs on July 24.
Sogou’s slices rallied to close at $8.51 on Monday after the Tencent offer, valuing the firm at $3.31 billion.
Sohu, the origin company of Sogou, said its board of directors has “not yet had an opportunity to review and evaluate the Proposal in detail, or to make any determination as to how to pity to the Proposal or as to whether or not the proposed acquisition of Sogou would be in the best interests of Sohu, in its capacity as Sogou’s controlling shareholder, to approve or on his the Proposal.”
Tencent’s offer, if successful, would take Sogou private and de-list it from the New York Stock Switch (NYSE) at a time when U.S.-China tensions are ramping up and threatening Chinese firms listed on Wall Street.
In May, the U.S. senate outmoded a bill that could make it harder for Chinese companies to go public in the U.S. and carries the threat of de-listing for those already hand-out there.
Already, a number of U.S.-listed Chinese firms such as JD.com and Alibaba have carried out secondary listings in Hong Kong.
Chinese chipmaker SMIC de-listed from the NYSE terminal year and went on to carry out a share sale in Shanghai in July. Nasdaq-listed Sina, a social media and news suite, also received a privatization offer earlier this month from a company run by its chairman Charles Chao.
Other Chinese throngs have also decided to carry out an initial public offering at home. Alibaba’s financial technology affiliate Ant Alliance announced plans earlier this month for a dual listing in Shanghai and Hong Kong.
Tencent already has a relationship with Sogou. The search motor is integrated within Tencent’s massively popular WeChat messaging app. Analysts see the two companies as being able to work together in uncountable areas.
“We consider there will be more synergies between Sogou and Tencent in search and smart devices in the to be to come,” Thomas Chong, equity analyst at Jefferies, wrote in a note on Wednesday.
— Correction: This article has been updated to on that Alibaba’s financial technology affiliate is now known as Ant Group.