Chinese Sohu, Sogou Shares Skyrocket More Than 40% In New York After Tencent Buyout Offer

Tencent Holdings Limited’s (OTC: TCEHY) offer to purchase Sogou Inc (NYSE: SOGO), and take it private, sent the Chinese search engine firm, and parent company Sohu.com Ltd's (NASDAQ: SOHU), shares soaring on Monday.

What Happened

The Shenzhen-based technology giant is proposing to pay $9 per American depositary share of Sogou in cash, a premium of 56.5% on July 24’s closing price of $5.75.

The Chinese multimedia conglomerate already owns 39.2% of Sogou’s total issued and outstanding shares and has 52.3% of total voting power in the firm. The search engine's parent Sohu hasn't yet decided on its response to the offer, it said in a statement disclosing the offer.

The Sogou search engine is already integrated into Tencent’s popular messaging platform WeChat.

Why It Matters

The Tencent offer comes at a time for Sogou when Chinese companies listed in the United States are scrambling for alternatives, as relations between the two countries continue to deteriorate. The  U.S. Senate approved a bill in May that could lead to the delisting of a significant number of Chinese companies on the country's exchange desks.

Last month JD.Com Inc (NASDAQ: JD) carried out a secondary listing in Hong Kong that raised about $3.88 billion.  Alibaba Group Holding Limited (NYSE: BABA) also debuted in Hong Kong last year and raised $11 billion in its IPO.

Ant Financial Services Group, an Alibaba subsidiary, is planning simultaneous listings in Hong Kong and Shanghai.

Price Action

Sogou shares closed 48% higher at $8.51 on Monday after the offer was made, taking the company’s valuation to $3.31 billion. The shares were mostly unchanged in the after-hours session.

Sohu shares added nearly 40% at $15.55 in the regular session, and were up another 2.4% at $15.92 in the after-hours session.

Photo  by WhisperToMe on Wikimedia Commons

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