Xiaomi may lead the privatization or even direct acquisition of Xunlei

On June 30, Forbes website published an article saying that the upgrade of the cooperative relationship between Thunder and Xiaomi is likely to indicate that Xiaomi will lead the privatization of Thunder or even directly acquire Thunder.

The upgrade of the partnership between Xunlei and Xiaomi indicates that Xiaomi may soon join other buyers to privatize Xunlei or directly acquire Xunlei, as Xiaomi is looking for partners or mergers and acquisitions to realize its dream of building an ecosystem of Internet services and related devices.

After more than a year of cooperation, Xunlei and Xiaomi recently announced to join forces to enter the CDN (content distribution network) market and released the latest industry brand project "Star Domain". In fact, this project is also part of Xiaomi's efforts to create Internet services (such as online video) for its smartphones, smart TVs, set-top boxes and other devices.

The cooperation between the two parties is not very surprising, because when Xunlei conducted its IPO (initial public offering) a year ago, Xiaomi acquired about 30% of the shares by injecting capital into Xunlei. But since then, Xunlei's stock price has evaporated rapidly, shrinking by 50% at most. Of course, Xunlei's stock price has rebounded to the level at the time of IPO in the past few months. However, with the recent return of a large number of Chinese concept stocks to the domestic A-share market, coupled with Xunlei's in-depth cooperation with Xiaomi, an interesting result may eventually emerge: Xiaomi may quickly join other buyers to privatize Xunlei, or directly acquire Xunlei.

Let's start with the creation of the "Xingyu" brand, which aims to provide gaming and video products over the Internet. The two parties will use a product from Xunlei to increase Internet speeds even in poor network conditions. Of course, this technology is already used in Xiaomi phones.

This new partnership may seem boring, but it is interesting that the relationship between Xiaomi and Xunlei is heating up. In the past two years, China's online video market has undergone a huge transformation, resulting in almost all video sharing companies either being acquired or selling a majority stake to larger companies.

Former industry leader Youku Tudou has sold more than 20% of its shares to Alibaba , which has become Youku Tudou's largest shareholder. Baidu has also made a major acquisition in this field, acquiring PPS in 2013. Before Xiaomi acquired a 30% stake in it last year, Xunlei became the only major video provider without a strong partner.

This makes us wonder: where will Xunlei go after it is listed on the New York Stock Exchange? In the past three months, many Chinese Internet companies listed in the United States have gone private. The reason is that their stocks have not been recognized by American investors, and at the same time, the domestic stock market in China has been bullish. This is also one of the reasons why Xunlei's stock price has started to rebound recently. In the past three months, Xunlei's stock price has almost doubled.

Even so, Xunlei's market value is only a modest $800 million. Assuming Xiaomi holds about 50% of Xunlei's shares, based on the current share price, Xiaomi needs about $400 million to $500 million to acquire Xunlei's US-listed shares and shares held by other investors.

Xiaomi has enough funds to support such a potential acquisition. Last year, Xiaomi raised $1.1 billion. At that time, Xiaomi was proud because the company became the world's third largest smartphone manufacturer four years after its establishment. But then Xiaomi suffered a series of setbacks and disappeared from the headlines. If Xiaomi acquires Xunlei in its entirety, it will undoubtedly return to people's attention (although it was easy to make headlines in the past). At the same time, it is also a wise move for Xiaomi to build an ecosystem of Internet services and devices.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.