Sogou Receives Privatization Proposal from Tencent
Sogou, 7/27/20
Chinese online search engine operator Sogou (NYSE: SOGO) has announced that today it received a privatization proposal from its largest shareholder, Chinese internet giant Tencent (0700.HK). The preliminary non-binding proposal from Tencent would see Tencent acquire all of the outstanding ordinary shares, including ordinary shares represented American depositary shares ("ADSs"), of Sogou that are not already owned by Tencent or its affiliates for USD 9.00 in cash per ordinary share or ADS (the "Proposed Transaction"). The Proposed Transaction, if completed, would result in Sogou becoming a privately-held, indirect wholly-owned subsidiary of Tencent, and Sogou's ADSs would be delisted from the New York Stock Exchange.
The proposed purchase price represents a premium of approximately 56.5% to the closing trading price of the ADSs on July 24, 2020, the last trading day prior to the July 27 proposal date and a premium of 84.9% to the volume-weighted average price during the last 30 trading days.
As of the date of the proposal, Tencent had entered into certain support agreement with Sohu (Nasdaq: SOHU) founder and CEO Charles Zhang, who beneficially owns approximately 6.4% of Sogou's total issued and outstanding shares and 0.9% of Sogou's total voting power based on Sogou's public filings, pursuant to which Charles Zhang has agreed to (i) vote all of the Shares beneficially owned by him in favor of the Transaction, and (ii) sell to Tencent all the Shares beneficially owned by him prior to or in the Transaction. Tencent currently beneficially owns approximately 39.2% of the total issued and outstanding Shares and 52.3% of the total voting power of Sogou. Subject to approval by Sogou's board of directors and shareholders (as applicable), Tencent expects that the Transaction may be effected via a long-form merger or short-form merger, as applicable, at the proposed purchase price.
Tencent intends to finance the Transaction with its cash on hand, and does not anticipate requiring debt financing to consummate the Transaction.
Sogou expects that a special committee of the Sogou Board, composed solely of independent directors, will consider the Proposal Letter and the Proposed Transaction.
Editor's Note: Chinese online media and entertainment company Sohu, the company which first launched the Sogou platform, currently owns a 33.8% stake in Sogou and controls 44% of its voting rights. To view the full privatization proposal, please click here.
Keywords: Charles Zhang Internet online search Sogou Tencent Sohu 0700.HK SOGO M&A delist
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