Chinese internet company Qihoo 360 Technology Co. has received a buyout offer of $9 billion USD from a group that includes the company’s Chairman and CEO Zhou Hongyi, they revealed yesterday.
The company’s board of directors will form a separate committee to assess the deal, which proposes a buyout of $77 USD per American depositary share. The company’s shares have jumped 12.9% to $74.10 USD in New York after hours trading.
China’s fertile stock market has begun to beckon several U.S.-listed companies back to the mainland. According to data firm Dealogic, 11 Chinese companies listed in the U.S. have announced plans to delist, including giants such as Ctrip.com and waning social network Ren Ren. The announcement from Qihoo now brings that number to 12.
Stock indexes across China are uniformly up, with several over 50%, including the Shenzhen market which is fast becoming a hotbed for new and existing technology companies.
According to an internal email cited on Chinese media, Qihoo CEO Zhou Hongyi believes the company’s $8 billion USD capitalisation undervalues the company’s market potential. He is now hoping that privatisation will allow them to reassess the company’s position.
VC firm Sequoia Capital is among the consortium including Hongyi that plans to privatise the company. CITIC Securities and China Renaissance are also involved.
At the same time China’s State Council said it is looking into ways to facilitate movement between local tech companies and Chinese stock markets this Tuesday. They have also committed several billion in state money to boosting local innovation at national and city levels. This includes subsidies and free office spaces for tech companies in upcoming innovation hubs such as Shenzhen and Suzhou.
Image Credit: Qihoo 360