Tencent Holdings Ltd (騰訊) has offered to buy out and take private search engine Sogou Inc (搜狗) in a US$2.1 billion deal, adding to a slew of Chinese technology giants seeking to delist from US bourses.
Shares of the social media heavyweight yesterday climbed as much as 4.7 percent, buoyed by speculation that it would more closely integrate Sogou’s artificial intelligence technology with its own services and devices to gain an edge on rivals such as TikTok owner ByteDance Ltd (字節跳動).
Tencent has in the past few years come under pressure from ByteDance and other up-and-coming rivals in the emergent short-video arena.
Beijing-based Sogou has long been the default in a slew of Tencent products including its marquee social app WeChat (微信). It has also been making a push into artificial intelligence.
A takeover of Sogou also raises the prospect of a lucrative listing in Hong Kong or Shanghai, on the heels of well-received debuts by Alibaba Group Holding Ltd (阿里巴巴) and JD.com Inc (京東).
Sogou chief executive officer Wang Xiaochuan (王小川) in 2018 declared his ambition to list on mainland bourses when regulations permit.
Chinese Internet companies are exploring listings closer to home after a proposed US bill threatened to force them to delist from New York by imposing stricter disclosure requirements.
Online gaming company Changyou.com Ltd (暢遊) got taken private this year by Sohu.com Ltd (搜狐), and 58.com Inc (58同城) is being bought out by a private equity consortium for US$8.7 billion.
Tencent is offering US$9 in cash for each US depositary share it does not already hold in Sogou, backed by fellow Internet giant Sohu. That is a 57 percent premium to the target company’s close on Friday.
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