Tencent makes a bid to buy out Sogou search engine

Tencent makes a bid to buy out Sogou search engine

Chinese tech giant Tencent proposed buying out Chinese search engine Sogou, said its parent company Sohu on Monday, a move that would mean the subsidiary would delist in New York.To get more Tencent news, you can visit shine news official website.

Why it matters: In considering the proposal, Sogou joins Chinese media firm Sina in mulling over delisting from US stock exchanges amid new investor-protection legislation and US-China trade uncertainties.

Details: Long-time investor Tencent proposed acquiring all of the outstanding ordinary shares of Sogou at $9 a share, according to the Sohu statement. Tencent’s initial proposal is not binding and has not yet been reviewed by the Sohu board.

Neither Sohu nor Sogou have made any decisions with respect to Tencent’s offer, the companies have said. But if the tentative transaction is finalized, Sogou will delist from the New York Stock Exchange (NYSE) to become a privately held subsidiary of Tencent, Sohu said. Tencent and Sogou have a long relationship. When Sogou listed on the NYSE in 2017, Tencent was its largest shareholder and promoted Sogou’s search engine in its own products. Sogou is the second-largest search engine in China behind Baidu and its Sogou Pinyin Method, a popular Chinese language input software, had 503 million monthly active users (in Chinese) as of December 2019. Tencent currently owns approximately 39.2% of the total issued and outstanding shares and holds 52.3% of Sogou’s total voting power. Sogou’s share prices on the NYSE surged more than 47% on Monday. A Tencent representative declined to comment late Monday, and Sohu did not respond to an emailed request from TechNode. Context: Growing distrust between US and Chinese lawmakers is spreading throughout financial markets. On May 20, CNBC reported that the US Senate unanimously passed legislation prohibiting foreign companies from listing on US exchanges or raising money from American investors unless they can prove “they are not owned or controlled by a foreign government.”

Alibaba’s shares dropped 2% in response to the news and several high-profile Chinese tech firms are reconsidering their place in US markets, according to the report. The Chinese online marketplace 58.com delisted in June, and Sina is also considering delisting following an acquisition proposal in July from New Wave, a company owned by Sina chairman and CEO Charles Chao. China’s largest chipmaker Semiconductor Manufacturing International Corporation (SMIC) ended a 15-year listing on the NYSE in June 2019, citing low trading volumes and the high cost of listing in New York and complying with local laws. 58.com has not revealed where they planned to relist, but it could follow SMIC’s footsteps by listing on the Shanghai Stock Exchange, continuing the trend of Chinese companies turning away from the US to Shanghai or Hong Kong markets. US regulators are unable to access Chinese companies’ audit records, a legal requirement for listing on US exchanges. Though the legislation doesn’t specifically call out Chinese companies, US-China trade tensions pushed issues of investor safety and financial accountability to the fore. The law’s authors have also called out China for not “playing by the rules.”