How did Sogou respond to Tencent’s acquisition? What products does Sogou have?

Sogou responds to Tencent acquisition

Last night, Sogou said it had received a preliminary non-binding offer from Tencent to acquire the company in the form of a wholly-owned transaction at a price of US$9 per share. After the transaction is completed, Sogou will become a wholly-owned subsidiary of Tencent and will be delisted from the New York Stock Exchange.

Sogou CEO Wang Xiaochuan later responded on his WeChat Moments: "Thank you Tencent for recognizing Sogou's value, technical capabilities, and product innovation capabilities. We will seriously discuss and weigh related matters so that Sogou can continue to create greater value for users."

If the deal goes through, this will be Tencent's second investment in Sogou.

In September 2013, Tencent invested US$448 million in Sogou. After the transaction was completed, Tencent acquired 36.5% of Sogou's shares. Tencent will merge its Tencent Soso business and other related assets into Sogou, while Sogou will continue to operate independently as a subsidiary of Sohu.

As of March 31, 2020, Tencent held 38.71% of Sogou's shares, making it the single largest shareholder, and Sohu held 33.8% of the shares, making it the second largest shareholder of Sogou. Sohu CEO Zhang Chaoyang owns 6.4% of Sogou, and Sogou CEO Wang Xiaochuan holds 5.5% of the company.

Currently, Sogou has several major businesses including search, input method, and smart hardware. Search and related income are the main source of Sogou's revenue.

Data shows that Sogou's revenue in the first quarter of 2020 was 1.79 billion yuan, a year-on-year increase of 5%. Among them, search and search-related revenue was 1.658 billion yuan (US$238 million), accounting for more than 92% of the company's total revenue. Sogou's other revenue in the first quarter was RMB 138 million (US$20 million), a year-on-year increase of 6%, mainly due to the increase in sales revenue of smart hardware products.

Influenced by the news that Tencent plans to acquire Sogou, both Sogou and Sohu surged. As of the close of U.S. stocks, Sogou's stock price rose 48% to US$8.51; Sohu's stock price rose 39.96% to US$15.55.