360 is dissatisfied with being undervalued and starts privatization

Latest update time：2021-09-03 15:23

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Qihoo 360 has been added to the wave of privatization of Chinese concept stocks. At

18:44 on June 17, Qihoo 360 Chairman Zhou Hongyi announced in an internal email to all employees that he had decided to launch the strategic plan for privatization of 360.

"We just received the privatization email, which was very sudden. The company has not yet made further explanations to employees." A Qihoo 360 insider told the reporter of China Business News.

Zhou Hongyi said in the email that he and Qihoo 360 President and 360 Enterprise Security Group CEO Qi Xiangdong made a strategic choice of privatization after careful consideration, especially after repeated consideration of the current global and Chinese capital market environment.

"Many of us believe that 360's current market value of 8 billion US dollars does not fully reflect the value of 360 as a company." Zhou Hongyi said in the internal email.

Zhou Hongyi made a statement on privatization as early as 2011. At that time, when the short-selling agency Citron had repeatedly released short-selling reports on 360, Zhou Hongyi told the reporter of China Business News that he did not understand the phenomenon of privatization of Chinese concept stocks. He believed that listed companies have greater transparency, and in addition to enjoying huge returns from foreign capital markets and shareholders, they should accept the assessment of the capital market and should also bear the ups and downs of market value. Zhou Hongyi emphasized that Qihoo 360 will insist on the path of listing.

But now, Qihoo 360's attitude towards privatization has undergone a huge change.

At present, the board of directors of Qihoo 360 has received a preliminary non-binding privatization offer signed on June 17, 2015. The offer comes from Zhou Hongyi, CITIC Securities and its affiliates, GoldenBrick Capital Private Equity Fund IL.P, China Renaissance Capital, Sequoia Capital China I, LP and its affiliates, and acquires all the outstanding common shares of Qihoo 360 that they do not yet hold at a cash price of US$51.33 per common share (equivalent to US$77 per American depositary share).

Qihoo 360's board of directors reminded that the company has only received this non-binding privatization proposal and has not made any decision yet. There is no guarantee that the buyer will make a final formal offer, nor can it be guaranteed that any transaction will be reached in the future.

Zhou Hongyi said that Qihoo 360's operating income in 2014 was more than 8.6 billion yuan, and its net profit exceeded 2.1 billion yuan. At the end of 2014, the company's total assets reached 20.6 billion yuan, and its cash exceeded 10 billion yuan, and its overall financial situation was healthy. Privatization is the inevitable choice to maximize the value of 360.

Qihoo 360 closed at $34 on its first day of listing in 2011, up 134.48% from the issue price, with a market value of $3.96 billion, surpassing New Oriental, Sohu, and Shanda, and ranking sixth among all Chinese concept stocks. Last year, its stock price once exceeded $100.

But in the past six months, Qihoo 360's stock price has almost been "cut in half." In the past 52 weeks, its highest stock price was $104.81 and its lowest stock price was $44.56.

This may be related to the weakening demographic dividend of its PC Internet and its "loss" in the mobile field. The total number of monthly active users of Qihoo 360's PC-based products and services has slowed down, while in the fields of mobile security and search, competitors such as Cheetah, Baidu, Tencent, and Sogou have all made efforts. In the mobile Internet, 360 has begun to layout and find "new entrances" in multiple hardware fields such as mobile phones, smart routers, and children's bracelets.

Zhou Hongyi also said in an email that 360's privatization is not only a capital operation, but also an important boost for 360 to enter a new stage of development.

The privatization of Chinese concept stocks is not an isolated case. Under the influence of Baofeng Technology, which has been popular in A-shares recently, Jiayuan.com, Renren, and Chuangmeng Tiandi, which are listed in the United States, have also chosen to privatize one after another.

"It is inevitable that most of them will come back." Wang Ran, founder of Yicai Capital, once told our reporter that everyone is not coming back to list on the Growth Enterprise Market, but in two directions-"New Third Board and A-share mergers and acquisitions or backdoor listings."