On the evening of July 27, Sogou announced that it received a invitation to the private acquisition of Sogou.If the transaction is successful, Sogou will delist from US stocks to become a joint venture subsidiary of Tencent.
The news came out, Sogou's stock price rose more than 40%, and the market value rebounded to more than $ 3 billion.At the time of the close of the day, Sogou's US stock market value had reached 3.3 billion US dollars, soaring at $ 1.08 billion overnight.
In fact, Tencent was already the largest shareholder of Sogou before issuing an invitation to acquire acquisitions.Public data from Sogou show that as of this season, Tencent has 39.2%of Sogou's equity and 52.3%voting rights; Sohu holds 33.8%of its equity and 44.1%voting rights. Tencent is already the largest boss of Sogou.
Sogou is the second search company in China. With Sogou input method, Sogou browser and other products, it has accumulated a large number of users.According to this year's first quarter financial report, Sogou's mobile phone input method has exceeded 4.80 million active users, and the peak of the Sogou mobile phone input method is 1.4 billion, and it continues to ranks the largest voice recognition application in China.
After integrating Sogou, Tencent can completely integrate its search engine into its products and ecosystems, and better use Sogou technology to enhance Tencent's search capabilities and increase the opportunities for advertising revenue.
Moreover, Sogou is also a technology company that focuses on artificial intelligence (AI) research on the language field. The accumulated voice recognition translation and other technical capabilities are also ranked among China.Tencent's acquisition of Sogou is also the AI strategy of seeking Sogou: one -person -machine dialogue, involving a language understanding of perception and cognitive levels; the second information analysis is based on language as the core to improve the ability of machine reading and reasoning.AI is the core value of Sogou, but it is Tencent's short board.Tencent needs to rely on Sogou's AI strategy to be stronger and bigger in the social field.
Tencent holds hand Sogou and opens the content resources of the WeChat ecosystem. It is also an important supply to Sogou's search pool.In 2017, Sogou was listed in the United States, but its performance in the capital market was not satisfactory. The market value fell from the initial $ 5.3 billion to the current $ 3.2 billion.One major reason is that Sogou's revenue source is single, and long -term dependence on traditional advertising business, which almost accounts for almost 90 % of Sogou's revenue.
This year's first quarter financial report shows that the net loss attributable to Sogou is about $ 224 million. The net loss in the same period last year was US $ 3.85 million, a year -on -year increase of 721.2%.At a critical time, Golden Lord Tencent injected huge funds to acquire, and saving dogs was when the liquidity was scarce.
Sogou also knows itself. Although it ranks second in the industry, Sogou's market share and Baidu gap are very different.In 2019, Baidu's market share was 67.09%, and only 18.75%of Sogou, the second child.So that Sogou's head Wang Xiaochuan admits that Baidu runs far in front of Sogou in resources, markets, and users.To be precise, if Baidu does well enough, there is no chance of us.So finding Tencent's backing is also the luck of Sogou.
For Sohu, which is currently in the transition period, the net loss of this year was $ 18 million. The same period last year was $ 52 million, and cash flow was also urgent.According to the purchase price of 9 US dollars per share given by Tencent, Sohu's holding 33.8%of Sogou's equity can be exchanged for $ 1.2 billion in cash.This is a timely liquidity for Sohu, which has a market value of only $ 678 million.
So this is not a business competition, but the cooperation that Tencent, Sohu, and Sogou each take.In this sense, Tencent's acquisition of Sogou is a model of business cooperation. It expands themselves in cooperation, and each family is full of cooperation.
If Tencent wants to acquire Sogou, next, the relationship between Tencent and Baidu will change subtle changes.Tencent and Baidu were originally two different platforms, one is a social platform, and the other is the search platform.The two companies that did not match the world will become enemies. Tencent relying on the Sogou after the merger and acquisition, it seems to have a fight with Baidu in terms of search engines.
The new wealth competition has begun, and the four Internet companies of BATJ (Baidu, Alibaba, Tencent and Jingdong Mall) will refresh.
(The author is a columnist in China Finance Media)
