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Sogou search engine to be acquired by Tencent

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On July 14, China Securities News reported that Internet giant Tencent received approval from authorities for its deal to acquire Sogou.

sogou
Sogou is the latest Chinese company to pull out of U.S. capital markets amid continuing tensions between the two countries and tightening rules and scrutiny from U.S. regulators.

Tencent’s plan to unconditionally purchase all of Sogou’s shares the day before was approved by China’s General Administration of Market Supervision.

The Chinese authorities reached this decision because they determined that the share exchange between the two parties did not violate antitrust laws.

Upon completion of the merger, Sogou’s outstanding Class A ordinary shares, including its American depositary shares (ADSs), will be cancelled in exchange for USD 9 in cash per share, representing a premium of approximately 56.5% over the closing price of the ADSs listed on the NYSE on July 24, the last day of trading prior to Tencent’s privatization proposal.

Tencent announced last year that it intends to acquire all of Sogou’s other shareholders for $3.5 billion (about 4 trillion won), delist it, and make it a wholly owned subsidiary.

Sogou provides a search service to WeChat, operated by Tencent. In July last year, Tencent was already the largest shareholder with a 40% stake in Sogou and 52.3% of the voting rights.

Earlier, the General Administration of Market Supervision imposed a fine of 500,000 yuan for violating the procedure, stating that Tencent had not applied for a business combination (managerial merger) review, even though Tencent had decided to acquire all the shares of Sogou.

For MetaNews.

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Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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