Tencent offers to buy out search engine Sogou - TechCentral

Tencent offers to buy out search engine Sogou

Tencent proposed on Monday to buy all of the shares it doesn’t already own in Chinese search engine Sogou, taking the company private and delisting its shares from the New York Stock Exchange.

Shenzhen, China-based Tencent offered US$9 in cash per ordinary share or American depositary share. The offer represents a 57% premium to the 24 July closing trading price of the ADS. Tencent currently owns about 39.2% of the total issued and outstanding shares in Sogou and 52.3% of the total voting power, Sogou said in a statement.

The potential acquisition fits into a growing trend of privatisation in the Chinese Internet sector, analysts at Jefferies wrote in a note to investors. This year, online gaming company Changyou.com was taken private by Sohu.com, and 58.com is being bought out by a private equity consortium for $8.7-billion. Tencent is also in advanced talks to take private Leyou Technologies, a Hong Kong-based videogame company.

While surprised by Sogou’s announcement, the analysts said they “expect there will be more synergies between the two companies in search and smart devices in the future”.

Sogou’s American depositary shares were up 48% to $8.49 in New York on news of the proposed acquisition.  — Reported by Michael Tobin, (c) 2020 Bloomberg LP

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