The deal will enable the publicly listed search engine company to go private
Tencent will take search engine company Sogou private in a $3.5bn deal. (Credit: そらみみ/Wikipedia.org)
Tencent has secured approval from China’s State Administration of Market Regulation (SAMR) for its previously announced $3.5bn takeover of Chinese search engine Sogou.
The deal, which was signed in September 2020, was approved unconditionally by the Chinese antitrust regulator.
It would enable Sogou, which is currently listed on the New York Stock Exchange (NYSE), to become a privately held company.
Tencent had first acquired a stake of 36.5% in the search engine in 2013 from Sohu for $448m and subsequently increased it to 40%.
The conglomerate had proposed to acquire the remaining 60% in the search engine for $9 per share. In this connection, THL A21, TitanSupernova, and Tencent Mobility, which are all subsidiaries of Tencent, had entered into a definitive agreement and plan of merger with Sogou.
As per the terms of the deal, TitanSupernova will be merged with the search engine company in an all-cash deal with the latter planned to become an indirect fully-owned subsidiary of Tencent.
Sohu had also agreed to sell its stake in Sogou to TitanSupernova under a share purchase agreement.
In May 2021, Sogou reported revenues of $137.2m for the first quarter of 2021, which is a year-over-year decrease of 47%. The company had cited the reduced revenues on the uncertainties regarding its business policies among certain advertisers owing to the takeover proposal from Tencent.
Sogou claims to be the second-largest search engine in China in terms of mobile queries and the fourth-largest internet company in the country on the basis of monthly active users (MAU).
The company’s range of products and services include the Sogou Input Method, which is a Chinese language input software for both personal computers and mobiles.