Sep 29, 2020 03:30 AM

Weibo Owner Sina Agrees to Go Private in Sweetened $2.6 Billion Deal

The Sina Corp. weibo microblog logo is arranged for a photograph in Hong Kong
The Sina Corp. weibo microblog logo is arranged for a photograph in Hong Kong

(Bloomberg) — Sina Corp. agreed to go private after an entity led by its chairman, Charles Chao, boosted its offer for the Chinese social media company to $43.30 a share in cash.

The Beijing-based company said the offer implied an equity value for the company of $2.59 billion and represented a 7.7% premium over its closing price Sept. 25. It’s also an increase from an original buyout proposal New Wave Holdings Ltd. made in July at $41 a share.

Chinese companies that once pursued the recognition and liquidity of listing their shares in the U.S. have shown an increasing inclination to turn instead to their home markets. Qihoo 360 Technology Co. delisted from the New York Stock Exchange in July 2016 and then sold shares in Shanghai in 2018 as 360 Security Technology Inc.

A number of Chinese tech firms have since delisted from U.S. exchanges or turned to other markets amid growing scrutiny by regulators. Tencent Holdings Ltd. offered in July to buy out and take private search engine Sogou Inc. in a $2.1 billion deal, while Inc. agreed to be bought out by a private equity consortium for $8.7 billion.

Sina went public in 2000 on Nasdaq during the dotcom boom, alongside other pioneers from China’s technology sector. It operates Weibo, a Chinese equivalent of Twitter.

In July, New Wave submitted a preliminary nonbinding proposal letter to take the company private. It said the current offer is an 18% premium over the closing price July 2, the last trading day before the earlier offer.

Morgan Stanley Asia Ltd. is the financial adviser to a special committee set up by Sina’s board. Gibson, Dunn & Crutcher LLP is serving as U.S. legal counsel, while Harney Westwood & Riegels is Cayman Islands legal counsel. Skadden, Arps, Slate, Meagher & Flom LLP is serving as New Wave’s U.S. legal counsel.

Sina’s unaudited second-quarter net revenues fell 5% to $507.7 million, the company reported Monday. The drop reflects weakening advertising revenues, which declined 10% year-on-year.

Net loss attributable to ordinary shareholders for the second quarter was $25.4 million, compared with a loss of $51.4 million a year ago, the company said.

Weibo also posted weaker net revenue of $387.4 million for the second quarter, down 10% from the same period a year ago. Net income was $198.4 million, up 92% from $103.0 million a year ago, Weibo said.

Weibo had 523 million monthly active users in June 2020, adding about 37 million users over the previous year.

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