Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Negative EVs: JOYY & Sohu's Steep Discount To Net Cash

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

StubWorld - Sohu, Yue Yuen/Pou Sheng, Rusal

Sohu/Sogou: Persuasive Situation Amid Ongoing Antitrust Investigations

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

Quiddity Advisors

Event-Driven

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<p>Around 9.5 months after <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 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://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, the Offer was granted unconditional approval by the State Administration for Market Regulation (SAMR) on the 12 July. </p>
<p>Apparently, that wasn't the final approval as the regulators continued to overhaul and tweak China's tech sector. In its<a href="http://ir.sogou.com/2021-08-09-Sogou-Announces-Second-Quarter-2021-Results" target="_blank" rel="noopener"> 2Q21 results</a> (announced on the 9 August) Sogou said it expected the merger with Tencent to complete in the 2H21.</p>
<p>Yesterday, Sogou <a href="http://ir.sogou.com/2021-09-23-Sogou-Announces-Completion-of-Going-Private-Transaction" target="_blank" rel="noopener">announced</a> the completion of the merger and shares have been suspended. Payment will be made "as soon as practical". </p>
<p>Hong Kong's Standard <a href="https://www.thestandard.com.hk/section-news/section/17/234417/Tencent-Sogou-merger-first-after-overhauls" target="_blank" rel="noopener">reported</a> yesterday that Tencent's news and content unit Tencent Kandian will absorb most of Sogou's business and employees.  After merging with Sogou, the search engine segment will be the core business of Tencent Kandian. Tencent was permitted to take up the 60.9% in Sogou it did not already own provided it established a "special mechanism" to ensure data security.</p>
<p>So that's done. This is a short-form merger - there was no vote. Dissension rights are now afforded for short-form mergers and I would expect some investors to take up those rights.  </p>
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<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> pockets ~US$1.2bn from the merger via its 33.8% equity stake in Sogou, versus its current market cap of US$857mn. </p>
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<p>More below the fold.</p>
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Around 9.5 months after Tencent (700 HK) and Chinese search-engine Sogou Inc (SOGO US) entered into a definitive agreement for a Going-Private Transaction, the Offer was granted unconditional approval by the State Administration for Market Regulation (SAMR) on the 12 July. 
Apparently, that wasn't the final approval as the regulators continued to overhaul and tweak China's tech sector. In its 2Q21 results (announced on the 9 August) Sogou said it expected the merger with Tencent to complete in the 2H21.
Yesterday, Sogou announced the completion of the merger and shares have been suspended. Payment will be made "as soon as practical". 
Hong Kong's Standard reported yesterday that Tencent's news and content unit Tencent Kandian will absorb most of Sogou's business and employees.  After merging with Sogou, the search engine segment will be the core business of Tencent Kandian. Tencent was permitted to take up the 60.9% in Sogou it did not already own provided it established a "special mechanism" to ensure data security.
So that's done. This is a short-form merger - there was no vote. Dissension rights are now afforded for short-form mergers and I would expect some investors to take up those rights.  


Separately, Sohu.com Inc (SOHU US) pockets ~US$1.2bn from the merger via its 33.8% equity stake in Sogou, versus its current market cap of US$857mn. 


More below the fold.


Sohu.com (SOHU US): Cashed Up As Tencent/Sogou Merger Completes