Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>Nearly a year after Chinese search-engine <a href="https://www.smartkarma.com/entities/sogou-inc" target="_blank" data-smartkarma-citation="entities:25996:1" rel="noopener">Sogou Inc (SOGO US)</a>  <a href="http://ir.sogou.com/2020-07-27-Sogou-Announces-Receipt-of-a-Preliminary-Non-Binding-Proposal-to-Acquire-the-Company" target="_blank" rel="noopener">announced</a> a preliminary non-binding proposal from <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, and around 9.5 months since <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115257193&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=6-K&amp;dateFiled=2020-09-29&amp;CK=1713947" target="_blank" rel="noopener">entering</a> into a definitive agreement for a Going-Private Transaction, the Offer has been granted unconditional approval by the State Administration for Market Regulation (SAMR). </p>
</div>
<div>
<p>This Merger is in the form of a short-form merger as per section 233(7) of the <a href="https://www.cima.ky/upimages/commonfiles/CompaniesLaw2020Revision_1579811065.pdf" target="_blank" rel="noopener">Companies Law of the Cayman Islands</a> - there is no vote. With SAMR sign-off in the bag, this deal should become effective very shortly, and accordingly, is trading tight to terms.</p>
</div>
<div>
<p>Separately, <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com Inc (SOHU US)</a> will pocket ~US$1.2bn from the merger via its 33.8% equity stake in Sogou, versus its current market cap of US$933mn. <em>And that is after yesterday's 28% jump in price.</em></p>
</div>
<div>
<div>
<p>More below the fold.</p>
</div>
</div>


Nearly a year after Chinese search-engine Sogou Inc (SOGO US)  announced a preliminary non-binding proposal from Tencent (700 HK), and around 9.5 months since entering into a definitive agreement for a Going-Private Transaction, the Offer has been granted unconditional approval by the State Administration for Market Regulation (SAMR). 


This Merger is in the form of a short-form merger as per section 233(7) of the Companies Law of the Cayman Islands - there is no vote. With SAMR sign-off in the bag, this deal should become effective very shortly, and accordingly, is trading tight to terms.


Separately, Sohu.com Inc (SOHU US) will pocket ~US$1.2bn from the merger via its 33.8% equity stake in Sogou, versus its current market cap of US$933mn. And that is after yesterday's 28% jump in price.



More below the fold.



Tencent/Sogou: And That's (Finally) A Wrap

<div>
<p>Back on the 27 July, Chinese search-engine <a href="https://www.smartkarma.com/entities/sogou-inc" target="_blank" data-smartkarma-citation="entities:25996:1" rel="noopener">Sogou Inc (SOGO US)</a>, majority-owned by <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com Inc (SOHU US)</a>  and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115257193&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=6-K&amp;dateFiled=2020-09-29&amp;CK=1713947" target="_blank" rel="noopener">entered</a> into a definitive agreement for a "Going-Private Transaction" at US$9/share.</p>
<p>Additionally, Sohu entered into a SPA with Tencent concerning its stake in Sogou, which would result in Tencent holding not less than 90% of the voting power in Sogou. Therefore the Merger would be a short-form merger - there is no vote. Dissenting rights will, however, now be afforded following the Grand Court of  Cayman Islands ruling handed down on the 28 January this year and discussed in <em><a href="https://skr.ma/H7E1t" target="_blank" rel="noopener">Changyou (CYOU US): Short-Form Merger Dissent Now Permitted</a></em>. Sohu's privatisation of Changyou competed on the 17 April.</p>
</div><div>
<p>The deal appeared to be a lock, until Sogou's 1 December <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115473750&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=SC+13E3%2FA&amp;dateFiled=2020-12-01&amp;CK=1713947" target="_blank" rel="noopener">SEC filing</a>, wherein the termination date for the SPA was pushed out to 31 July, from 29 March previously, to allow clearance from the PRC regulatory authorities, specifically State Administration for Market Regulation or SAMR.</p>
<p>What seemed an ample extension at the time now appears less assured as SAMR bears down on the tech sector. </p>
<p>This muddies when (and potentially if) the merger goes through. Plus the knock-on effect to Sohu which would pocket ~US$1.2bn under the merger compared to its current maker cap of ~US$0.7bn.</p>
<p>But Tencent is unlikely to walk - not at this Offer price. </p>
</div><div><p>More below the fold.</p></div>


Back on the 27 July, Chinese search-engine Sogou Inc (SOGO US), majority-owned by Sohu.com Inc (SOHU US)  and Tencent Holdings (700 HK), entered into a definitive agreement for a "Going-Private Transaction" at US$9/share.
Additionally, Sohu entered into a SPA with Tencent concerning its stake in Sogou, which would result in Tencent holding not less than 90% of the voting power in Sogou. Therefore the Merger would be a short-form merger - there is no vote. Dissenting rights will, however, now be afforded following the Grand Court of  Cayman Islands ruling handed down on the 28 January this year and discussed in Changyou (CYOU US): Short-Form Merger Dissent Now Permitted. Sohu's privatisation of Changyou competed on the 17 April.

The deal appeared to be a lock, until Sogou's 1 December SEC filing, wherein the termination date for the SPA was pushed out to 31 July, from 29 March previously, to allow clearance from the PRC regulatory authorities, specifically State Administration for Market Regulation or SAMR.
What seemed an ample extension at the time now appears less assured as SAMR bears down on the tech sector. 
This muddies when (and potentially if) the merger goes through. Plus the knock-on effect to Sohu which would pocket ~US$1.2bn under the merger compared to its current maker cap of ~US$0.7bn.
But Tencent is unlikely to walk - not at this Offer price. 
More below the fold.

Sohu/Sogou: Persuasive Situation Amid Ongoing Antitrust Investigations

<p>On the 24 January last year, <a href="https://www.smartkarma.com/entities/changyou-com-ltd-ads" target="_blank" data-smartkarma-citation="entities:19287:1" rel="noopener">Changyou.com (CYOU US)</a> <a href="http://ir.changyou.com/file/New-Comet-20200124.pdf" target="_blank" rel="noopener">entered</a> into a definitive agreement with <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com Inc (SOHU US)</a> at US$5.40/share, or US$10.80/ADS in cash. On the 14 April,  Sohu <a href="http://investors.sohu.com/static-files/4f6c805d-a81c-4799-a043-3d163d5702e7" target="_blank" rel="noopener">announced</a> the filing of the definitive plan of merger.</p>
<div>
<p>Sohu held 67.4% of shares out in Changyou via its A and B shares and 95.3% of the voting rights given the disproportionate voting power of the B shares. As Sohu held &gt;90% of the votes, the Offer was in the form of a short-form statutory merger under Cayman Law - i.e. approval from Changyou's shareholders was not required. No vote, no dissent. Done deal.</p>
<p><em><strong>But wait ...</strong></em></p>
<p>In a ruling handed down on the 28 January, the Grand Court of the Cayman Islands concluded that shareholders of companies that undertake a 'short-form' merger <em>are</em> entitled to dissent. </p>
<blockquote>
<p>It would be absurd to exclude a dissentient member of a company subject to short-form merger from the protection of section 238 simply because, unlike in the case of a long-form merger, that member is not allowed to vote.</p>
</blockquote>
<p>The ruling has wide-ranging implications.</p>
<p>More below the fold.</p>
</div>

On the 24 January last year, Changyou.com (CYOU US) entered into a definitive agreement with Sohu.com Inc (SOHU US) at US$5.40/share, or US$10.80/ADS in cash. On the 14 April,  Sohu announced the filing of the definitive plan of merger.

Sohu held 67.4% of shares out in Changyou via its A and B shares and 95.3% of the voting rights given the disproportionate voting power of the B shares. As Sohu held &gt;90% of the votes, the Offer was in the form of a short-form statutory merger under Cayman Law - i.e. approval from Changyou's shareholders was not required. No vote, no dissent. Done deal.
But wait ...
In a ruling handed down on the 28 January, the Grand Court of the Cayman Islands concluded that shareholders of companies that undertake a 'short-form' merger are entitled to dissent. 

It would be absurd to exclude a dissentient member of a company subject to short-form merger from the protection of section 238 simply because, unlike in the case of a long-form merger, that member is not allowed to vote.

The ruling has wide-ranging implications.
More below the fold.


Changyou (CYOU US): Short-Form Merger Dissent Now Permitted

<div>
<p>On the 29 September Back on the 27 July, Chinese search-engine <a href="https://www.smartkarma.com/entities/sogou-inc" target="_blank" data-smartkarma-citation="entities:25996:1" rel="noopener">Sogou Inc (SOGO US)</a>, majority-owned by <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com Inc (SOHU US)</a>  and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115257193&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=6-K&amp;dateFiled=2020-09-29&amp;CK=1713947" target="_blank" rel="noopener">entered</a> into a definitive agreement for a Going-Private Transaction at US$9/share.</p>
<p>In addition, Sohu entered into a share purchase agreement with Tencent concerning its stake in Sogou, the completion of which will result in Tencent holding not less than 90% of the voting power in Sogou. Therefore the Merger will be in the form of a short-form merger as per section 233(7) of the <a href="https://www.cima.ky/upimages/commonfiles/CompaniesLaw2020Revision_1579811065.pdf" target="_blank" rel="noopener">Companies Law of the Cayman Islands</a> - there is no vote. There are no dissenting rights.</p>
<p>That's about as clean a deal as you can get. But wait ...</p>
<p>On the 1 December, Sogou made an <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115473750&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=SC+13E3%2FA&amp;dateFiled=2020-12-01&amp;CK=1713947" target="_blank" rel="noopener">SEC filing</a>, with the following stated on page 34:</p>
<blockquote>
<p>In late November 2020, THL and Parent made an antitrust filing with relevant PRC regulatory authorities in connection with the Sohu Share Purchase and the Merger. Considering the time needed for the clearance of such filing, the parties decided to extend the termination date under the Sohu Share Purchase Agreement and the Merger Agreement. On December 1, 2020, (i) Sohu.com, Sohu Search, and Parent executed an Amendment No. 1 to Share Purchase Agreement, to <strong>extend the termination date under the Sohu Share Purchase Agreement from March 29, 2021 to July 31, 2021,</strong> and (ii) the Company, THL, Parent and TML executed an Amendment No. 1 to Agreement and Plan of Merger, to extend the termination date under the Merger Agreement from March 29, 2021 to July 31, 2021. (my emphasis)</p>
</blockquote>
<p>Shares are off ~2.3% following the announcement, and are now at a 4.4% gross spread to terms. </p>
<p>But isn't the anti-trust filing with the State Administration for Market Regulation a non-issue?</p>
<p>More below the fold.</p>
</div>
<div>
<p></p>
</div>


On the 29 September Back on the 27 July, Chinese search-engine Sogou Inc (SOGO US), majority-owned by Sohu.com Inc (SOHU US)  and Tencent Holdings (700 HK), entered into a definitive agreement for a Going-Private Transaction at US$9/share.
In addition, Sohu entered into a share purchase agreement with Tencent concerning its stake in Sogou, the completion of which will result in Tencent holding not less than 90% of the voting power in Sogou. Therefore the Merger will be in the form of a short-form merger as per section 233(7) of the Companies Law of the Cayman Islands - there is no vote. There are no dissenting rights.
That's about as clean a deal as you can get. But wait ...
On the 1 December, Sogou made an SEC filing, with the following stated on page 34:

In late November 2020, THL and Parent made an antitrust filing with relevant PRC regulatory authorities in connection with the Sohu Share Purchase and the Merger. Considering the time needed for the clearance of such filing, the parties decided to extend the termination date under the Sohu Share Purchase Agreement and the Merger Agreement. On December 1, 2020, (i) Sohu.com, Sohu Search, and Parent executed an Amendment No. 1 to Share Purchase Agreement, to extend the termination date under the Sohu Share Purchase Agreement from March 29, 2021 to July 31, 2021, and (ii) the Company, THL, Parent and TML executed an Amendment No. 1 to Agreement and Plan of Merger, to extend the termination date under the Merger Agreement from March 29, 2021 to July 31, 2021. (my emphasis)

Shares are off ~2.3% following the announcement, and are now at a 4.4% gross spread to terms. 
But isn't the anti-trust filing with the State Administration for Market Regulation a non-issue?
More below the fold.





Sogou/Tencent: Anti-Trust Wobble As Deal Nears Finish Line

<div>
<p>Back on the 27 July, Chinese search-engine <a href="https://www.smartkarma.com/entities/sogou-inc" target="_blank" data-smartkarma-citation="entities:25996:1" rel="noopener">Sogou Inc (SOGO US)</a>, majority-owned by <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com Inc (SOHU US)</a>  and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="http://ir.sogou.com/2020-07-27-Sogou-Announces-Receipt-of-a-Preliminary-Non-Binding-Proposal-to-Acquire-the-Company" target="_blank" rel="noopener">announced</a> it has received a preliminary non-binding proposal from Tencent to acquire all of its outstanding ordinary shares that are not already owned by Tencent, for US$9.00 in cash per ordinary share or ADS. The Offer price is a 57% premium to the undisturbed price and a two-year high.</p>
<p>Today Sogou <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115257193&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=6-K&amp;dateFiled=2020-09-29&amp;CK=1713947" target="_blank" rel="noopener">entered</a> into a definitive agreement for a Going-Private Transaction at the same Offer price of US$9/share.</p>
<p>Separately, <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com Inc (SOHU US)</a> has entered into a share purchase agreement with Tencent concerning its stake in Sogou, the completion of which will result in Tencent holding not less than 90% of the voting power in Sogou.</p>
</div>
<div>
<p>Therefore the Merger will be in the form of a short-form merger as per section 233(7) of the <em><a href="https://www.cima.ky/upimages/commonfiles/CompaniesLaw2020Revision_1579811065.pdf" target="_blank" rel="noopener">Companies Law of the Cayman Islands</a></em> - there is no vote. There are no dissenting rights.</p>
<p>Done deal - the Merger is expected to close in the fourth quarter of 2020.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


Back on the 27 July, Chinese search-engine Sogou Inc (SOGO US), majority-owned by Sohu.com Inc (SOHU US)  and Tencent Holdings (700 HK), announced it has received a preliminary non-binding proposal from Tencent to acquire all of its outstanding ordinary shares that are not already owned by Tencent, for US$9.00 in cash per ordinary share or ADS. The Offer price is a 57% premium to the undisturbed price and a two-year high.
Today Sogou entered into a definitive agreement for a Going-Private Transaction at the same Offer price of US$9/share.
Separately, Sohu.com Inc (SOHU US) has entered into a share purchase agreement with Tencent concerning its stake in Sogou, the completion of which will result in Tencent holding not less than 90% of the voting power in Sogou.


Therefore the Merger will be in the form of a short-form merger as per section 233(7) of the Companies Law of the Cayman Islands - there is no vote. There are no dissenting rights.
Done deal - the Merger is expected to close in the fourth quarter of 2020.


More below the fold.


China

Longmaster Information & Technology Company Limited provides community-based phonic value-added services. The Company's main product is a large-scale telephone phonic social and entertainment platform.

Longmaster Information&Technology (300288 CH)

Zhejiang NetSun Co., Ltd. provides Internet information service, website development and maintenance services, E-commerce service, and application software development. The company developed and is currently operating www.chemnet.com.cn, www.chemnet.com, www.texnet.com.cn, www.TexWeb.com, www.pharmnet.com.cn and other several vertical e-commerce websites.

Yirendai Ltd. engages in the online consumer finance business. The Company provides services for both online and offline marketplace connecting borrowers and investors, as well as wealth management services. Yirendai serves customers in China.

21Vianet Group, Inc. provides carrier-neutral Internet data center services. The Company hosts its customers' servers and networking equipment, as well as provides interconnectivity and managed network services to enable customers to deliver data across the Internet. 21Vianet conducts business in Beijing, China.

Qtone Education Group (Guangdong)., Ltd. provides family education information services. The Company's main products include systems development operation and maintenance, business promotion operations, read the information services, family education website services.

Xiamen 35.com Technology Co., Ltd. researches and develops application software, provides corporate email hosting services, electronic business homepage building services.  The Company also provides domain name, office automation system (OA), and customer relationship management system (CRM).

Hubei Century Network Technology Co. Ltd. provides internet content and service aggregation platforms. The Company delivers music, games, and other related products.

Everyday Network Company Limited operates and markets networks of new houses, second-hand houses, and homes. Also, the Company provides research and consulting businesses. The Company's main products include various types of system software.

Beijing Tianli Mobile Service Integration Inc provides mobile information services. The Company's main products include the MAS business, ICT service platform for business and mobile phone securities business.

Beijing Tianli Mobile Service (300399 CH)

Shanghai Ganglian E-Commerce Holdings Company Limited provides market information and B2B e-commerce services for steel and steel-related industries. The Company provides market information, research services and also offers business promotion to customers.

Infomart Corporation provides business to business (B2B) e-commerce services for food industry.  The Company offers ordering systems as well as database systems that contain detailed information about food ingredients.

Connectwave Co., Ltd. operates as an online shopping portal site. The Company provides price comparing and shopping information providing service. Connectwave also generates income from advertisement.

Quotient Technology Inc. operates a promotion platform. The Company offers online printable, social, and mobile coupons in apparel, automotive, beverages, books, entertainment, food, healthcare, household, office supplies, pet, photography, professional services, and restaurants.

Softbank Technology Corp. provides electronic commerce (EC) related services. The Company mainly provides Internet systems integration, web site management, marketing consulting, and technical support services.

TrueCar, Inc. develops and publishes an online automotive information and communication platform. The Company provides data and price reports for cars both online and over the phone for consumers and a communications platform for automobile dealers to communicate with consumers. TrueCar serves customers throughout the United States.

Trade-Van Information Services Co., Ltd. provides custom filing services for importers and exporters through EDI (Electronic Data Interchange).  The Company's services include EDI, interactive EDI, file transfer, electronic mail, database inquiry, and archiving.

ADDCN Technology Co., Ltd. operates an Internet trading platform and online apparel retail businesses. The Company's platforms trades in virtual treasures, housing for tenants and buyers, car sales and apparel retail.

Ahnlab, Inc. designs and develops anti-virus solutions for network server systems, personal computers, and e-business data systems.  The Company also offers consulting service and develops Internet security applications.

Bengo4.com Inc offers lawyer and tax accountant advisory website services.

Real Matters Inc. provides an application software platform. The Company offers property valuation, collateral risk management, and data analytic services over a cloud-based environment. Real Matters serves real estate appraisers, lenders, mortgage insurers, and originators in the North American financial services industry.

Sohu.com Limited operates as an online media search and game service group company. The Company provides online brand advertising services on personal computers and mobile devices. Sohu.com serves clients in the People's Republic of China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Sohu.com (SOHU US)

Tencent/Sogou: And That's (Finally) A Wrap

The gross spread to terms is only 1%, but this is a done deal. I think this can become effective in a matter of weeks. Sohu's NAV discount is at...

David Blennerhassett

Sohu/Sogou: Persuasive Situation Amid Ongoing Antitrust Investigations

Trading at a gross spread of 7.5%. Even assuming another six months out from here to complete the deal, that looks compelling. I still like Sohu...

David Blennerhassett

Changyou (CYOU US): Short-Form Merger Dissent Now Permitted

The Court rightfully concluded s.238 provides the right of dissent in a short-form merger. Offerors will now face the prospect of dissension from...

David Blennerhassett

Sogou/Tencent: Anti-Trust Wobble As Deal Nears Finish Line

The new SAMR rules came into effect this week. I suspect Tencent/Sohu are largely playing nice by proving an extended timetable to facilitate the...

David Blennerhassett

Sogou/Tencent: And That's A Wrap

Chinese search-engine Sogou Inc (SOGO US), majority-owned by Sohu.com Inc (SOHU US) and Tencent Holdings (700 HK), has announced it has received...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Tencent/Sogou: And That's (Finally) A Wrap

The gross spread to terms is only 1%, but this is a done deal. I think this can become effective in a matter of weeks. Sohu's NAV discount is at...

David Blennerhassett

Sohu/Sogou: Persuasive Situation Amid Ongoing Antitrust Investigations

Trading at a gross spread of 7.5%. Even assuming another six months out from here to complete the deal, that looks compelling. I still like Sohu...

David Blennerhassett

Changyou (CYOU US): Short-Form Merger Dissent Now Permitted

The Court rightfully concluded s.238 provides the right of dissent in a short-form merger. Offerors will now face the prospect of dissension from...

David Blennerhassett

Sogou/Tencent: Anti-Trust Wobble As Deal Nears Finish Line

The new SAMR rules came into effect this week. I suspect Tencent/Sohu are largely playing nice by proving an extended timetable to facilitate the...

David Blennerhassett

Sogou/​Tencent: And That's A Wrap

Chinese search-engine Sogou Inc (SOGO US), majority-owned by Sohu.com Inc (SOHU US) and Tencent Holdings (700 HK), has announced it has received...

David Blennerhassett

Sogou/Tencent: And That's A Wrap