Qihoo 360 to Backdoor List in China at RMB 50 Bln Valuation
SJEC, 11/03/17
Chinese internet services and security software provider Qihoo 360 will complete a backdoor A-shares listing in China through Jiangnan-based SJEC Corporation (601313.SH), at a valuation of RMB 50.416 bln, according to a restructuring plan released recently by SJEC. Zhou Hongyi, chairman of Qihoo 360, will be the company's actual controlling shareholder following the transaction.
The transaction will entail two main components, the first involving asset sales and the second involving a combination of asset swaps and issuance of new shares.
In terms of asset sales, SJEC will transfer all of its assets except for a 100% stake in its wholly-owned subsidiary Suzhou SJEC Machinery and Electricity Institute to Suzhou SJEC Machinery and Electricity Institute. SJEC Corporation will then transfer a 90.29% stake in Suzhou SJEC Machinery and Electricity Institute to SJEC Corporation's actual controlling shareholders Jin Zhifeng and Jin Zuming in exchange for RMB 1.69 bln in cash. The remaining 9.71% stake in Suzhou SJEC Machinery and Electricity Institute will be exchanged for an equivalent percentage of a 100% stake in Qihoo 360, and Qihoo 360's shareholders will then collectively transfer the 9.71% stake in Suzhou SJEC Machinery and Electricity Institute to Jin Zhifeng and Jin Zuming.
In terms of asset swaps and issuance of new shares, SJEC Corporation will issue RMB 50.234 bln in new shares to Qihoo 360 shareholders, equal to the valuation of a 100% stake in Qihoo 360 (RMB 50.415 bln) less the value of shares exchanged for the 9.71% stake in Suzhou SJEC Machinery and Electricity Institute (RMB 182 mln).
Following the transaction, Tianjin-based Qixin Zhicheng Technology will be the listed company's controlling shareholder with a 48.74% stake. Zhou Hongyi will directly control a 12.14% stake in the listed entity, and will control additional 48.74% and 2.82% stakes through Qixin Zhicheng Technology and Tianjin-based Zhongxin Equity Investment, respectively, giving Zhou a combined 63.70% equity stake and making him the company's actual controlling shareholder.
In addition, the listed company's main business area will change from elevator production and sales to development of online security technology products and services.
Under the agreement, following the restructuring, Qihoo 360 forecasts net profits of at least RMB 2.2 bln, RMB 2.9 bln, and RMB 3.8 bln after deduction of non-recurring gains and losses for 2017, 2018, and 2019, respectively.
The overall share issue and asset purchase transaction plan will involve up to 42 entities, including several A shares listed companies including CITIC Guoan Group, Shandong-based Tyan Home (600807.SH), Zhongnan Red Cultural Group (002445.SZ), Hunan TV & Broadcast Intermediary (000917.SZ), and Shanghai-based 37 Games, a subsidiary of Wuhu Shunrong Sanqi Interactive Entertainment (002555.SZ).
Keywords: SJEC Corporation 601313.SH Jin Zhifeng Jin Zuming Zhou Hongyi Internet security software valuation Qihoo 360 Qixin Zhicheng IPO backdoor listing
Sending
