It’s been seven years since Tencent picked up a 36.5% stake in Sogou to fend off rival Baidu in the online search market. The social and gaming giant is now offering to buy out and take private its long-time ally.
NYSE-listed Sogou said this week it has received a preliminary non-binding proposal from Tencent to acquire its remaining shares for $9 each American depositary share (ADS) it doesn’t already own.
That means Sohu, a leading web portal in the Chinese desktop era and the controlling shareholder in Sogou, will no longer hold an interest in the search firm.
Sohu’s board of directors hasn’t yet had an chance to assess the proposal or figure out whether to select the deal, the business said .
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Sogou’s stocks jumped 48 percent over the news to $8.51 on Monday, nevertheless still far under its all-time large at $13.85 in the time of its first public offering.
Founded in 2005, Sogou went public in late 2017 billing itself as a challenger to China’s biggest search service Baidu, though it has long been a distant second.
The company also operates the top Chinese input software, which is used by 482 million people every day to type and convert voice to text, according to its Q1 earnings report.
Ever since the strategic venture with Tencent kicked away, Sogou, so”Search Dog” in Chinese, has become the default search engine to get WeChat and gained hugely from the giant’s traffic, even although WeChat has also developed its own search feature.
The possible buyout will include Sogou to some listing of Chinese companies to delist in the U.S. as tensions between the nations heighten lately.
It is going to also allay concerns among investors that fear WeChat Search would make Sogou redundant.
So far WeChat’s proprietary search function is apparently gleaning data mostly within the program’s enclave, from users’ information feed, user-generated posts, e-commerce shops, via to messenger programs integrated into WeChat.
That is a great deal of articles and solutions targeted at WeChat’s 1.2 billion active users. A lot of men and women don’t look past the chat program to customer information, purchase food, play games, or even buy markets.
However there stays information away from the monumental ecosystem, and that is Sogou’s turf — to deliver what is available on the open internet (obviously, subject to government censorship including most of Chinese providers ) to WeChat users.
The structure reflects an endemic clinic on the Chinese net — giants obstructing each other or which makes it difficult for rivals to get their content.
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The objective is to lock traffic and consumer insights. For example, articles printed on WeChat can not be hunted on Baidu. Consumers can not open Alibaba shopping hyperlinks without even leaving WeChat.
Sogou is barely WeChat’s only lookup ally. To catch a complete selection of data requirements, the messenger has also struck deals with co-opt fellow microblogging platform Weibo, Quora-like Zhihu, and societal trade service Xiaohongshu to its hunt pool.
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