2015-06-22

Why Did QIHU Go Private?

EO: 360为什么私有化
Zhou did not address this issue since then interviews with the media, he only referred to his intention to privatization within the letter. "In order to better the future development of 360 (QIHU), old Qi (Qi Xiangdong, president refers to 360) and I after careful thought, he decided to start 360 privatize strategic plan, which is an active strategic choice after the repeated consideration of the current global and Chinese capital market environment made . "He said," our company among many people think that 360 is currently $ 8 billion in market capitalization, did not fully reflect the value of the company. "

This is the tenth since June takes shares in privatized companies made the offer, on the same day, Renren (RENN) and 21 Vianet (VNET) announced it will be privatized, their goal is to return to A shares mostly. Baofeng is up 43 times in the past three months, those gains are persuasive enough, its market value is equivalent to eight times that of Xunlei (XNET) in the United States; Leshi (300104), as also a good example, its market capitalization is 8 times that of YoukuTudou (YOKU).
This paragraph discusses something I would have expected companies to do instead: list on both exchanges.
In fact, a few months ago, there are rumors in the capital level will be 360 ​​this year, a big move. And in May this year, the formal establishment of 360 corporate security group has shown that this is not just a rumor. 360 insiders said the company is to be listed separately, Qi Xiangdong In an interview with this reporter, have hinted at these types of companies in the A share market would be a good choice, "the A-share listed? Please enjoy we hope to help. "

At that time, most would guess are 360 ​​theme of "split" rather than privatization now. According to speculation capital circle 360 ​​will further sort out the current three core businesses: security, commercial (search, browser, cash flow distribution platform product) and hardware, and then seek a separate listing for each business.

Which it has a certain logic. Three business valuation model is completely different from last year, 360 have been aware of the seriousness of this problem. According to media reports, Cool great God to remove investment and NETCORE (do a router company), the 360 ​​also invested in dozens of the great potential of the new hardware company. Zhou Hongyi that with the advent of the era of things, the 360 ​​must regain the right to speak at the hardware level, but this has not been recognized by Wall Street.
The main reason to leave the U.S. may be the lack of understanding of the Chinese market on Wall Street. The American market focuses on innovation, while the Chinese aim to make money.
"The US stock market relatively advocating innovation, innovation-driven market; and more Chinese enterprises are business-driven model like this game very common in the United States, it is difficult to be optimistic about the current state of development. 360 doesn't have much imagination, especially now involved in the mobile business, the US market is more not read. "said Fang Xingdong, chairman of the Internet Lab.
Therefore, the logic is more conventional corporate security and hardware these two new services in the domestic market alone, and 360 in order to continue business into the main company listed on the NYSE.
The fallout from the the Snowden affair my also be having an effect:
360 is now faced with a somewhat "panic" in China. After Snowden event, national levels, especially government ministries, the central enterprises and large private enterprises on the importance of information security surge.

"You look up how many times last year opened a related forums and conferences, you know how hot, sometimes five or six games in one day." 360 technology vice president, said Tan Xiaosheng, he is now second in command of 360 corporate security group. 360 can refer to the information security template is now the leading stocks Venus A shares in the past month, its stock price reached its highest point in five years of its listed --73.1 yuan, and after the company's stock price hovered perennial down 20 yuan.

Although the Chinese government has not banned foreign information security companies can not enter China, but this thing in the future will be more and more impossible. First, companies such as the United States Fireeye thanks to the cooperation with the military very close, so the US government is prohibited "export"; Second, the Chinese government will be in accordance with the relevant provisions of security There are some requirements for foreign companies, such as submit their own core code before it can carry out services in the country, but not too much foreign companies are willing to accept such a request.
Going private may not be a smooth ride though. The Focus Media reverse merger onto the A-share market may fail.
Even if all of them are optimistic about the return of 360 A shares, but it does not mean you can sit back and relax Zhou. Focus Media backdoor Hongda New Material is likely to die, which the Commission is to initiate an investigation. Moreover from stocks privatization, then the A-share listed a variety of ways is an extremely complex project. "Our listing process can be organized into a textbook, and hired a global law firm devoted to storm the market, and a summary of the return of red chips." STORM CEO Feng Xin said.
Will the Chinese bull market last long enough?
Delisting from the United States needs 6-12 months, in accordance with the relevant provisions of the queue in the domestic market after three years of the matter is. Even this year, the formal implementation of the registration system, they have needed one or two years time, go directly to the new board listing Maybe time will be shortened, but its financing capacity, compared with the secondary market is still a gap.

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