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Rumor: Search Rivals Compete to Acquire Sogou

Sina Tech, 5/09/13

According to an industry insider, Chinese internet firm Sohu's (Nasdaq: SOHU) online search subsidiary Sogou is currently seeking an acquisition partner, with online search engine operators Baidu (Nasdaq: BIDU), Qihoo 360 (NYSE: QIHU), and Tencent (0700.HK) all looking to purchase the company. Qihoo 360 has reportedly offered USD 1.4 bln in a combination of cash and stock offerings to acquire to company, while Baidu has offered an even higher sum. Negotiations are ongoing.

As explained by the insider, Sogou has reached a development bottleneck, and pressure from Baidu and Qihoo 360's So.com search engine is making it increasingly difficult for Sogou to grow the company's search engine market share.

Tencent's involvement in the deal is focused on deterring Sogou's acquisition by Qihoo 360. Sogou CEO Wang Xiaochuan reportedly favors selling the company to Qihoo 360, while Soso Chairman Charles Zhang is hoping that the company will be acquired by Baidu. The source reported that Qihoo 360 is most likely to win the acquisition.

Another source has reported that Sogou plans to IPO later in the year and that the current round of acquisition talks are actually related to the sale of a 15-20% stake in Sogou before its IPO.

Qihoo 360 CEO Zhou Hongyi has been actively seeking acquisitions to improve the company's standing in the search market, including participation in previous talks to purchase mobile browser developer UCWeb.

Representatives from Sogou, Qihoo 360 and Baidu all declined to comment on the matter.

Editor's Note: For more information on this topic, please see "Rumor: Sogou in Talks to Acquire Soso," MD 2/16/13 issue, "Rumor: Tencent to Acquire Stake in Sogou," MD 2/16/13 issue, and "Rumor: Baidu Tried to Acquire Sogou in Early 2012," MD 6/07/12 issue.

Keywords: Wang Xiaochuan Zhou Hongyi Internet online search Baidu Sogou Soso Tencent Sohu 0700.HK BIDU Qihoo 360 QIHU Charles Zhang M&A

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