In July, it was reported that Sina, had turned down Digital Sky Technology (DST)’s $500m investment in Sina Weibo. But it seems that the talk between two parties is still on going. We just heard from a reliable source that Sina finally accepted the investment from DST. He said, it can be ‘almost’ confirmed that,
The deal is a convertible bond ($200mm) which converts into Sina stock at $65 per share. In addition to that, DST might also buy straight stock in SINA (equity). And the convertible bond likely has a small interest and could be converted into the stock at $65 per share at any time.
This deal will give Sina Weibo ~$1bn valuation.
Is it a better deal if we compare it with what’s reported in July? You may simply tell it from the figures. In July, Sina stock has ~$120 per share and the report said the valuation offered by DST was at $5bn. And now its stock is down to $52 per share. Sina Weibo claims 250m users in November, and Twitter which claims 100m active users, recently received $300m investment from the Saudi Prince and the company is now valued at $8.4bn.
Also the interesting part is that DST is partially owned by Tencent Holdings Ltd. (0700.HK) which holds 10.26% of its shares. But as you may know, Sina Weibo’s biggest competitor is Tencent Weibo which even claims larger user base (310m registered users in Nov 2011).
Why Sina needs the investment? Your thoughts?