Qihoo 360 's privatization enters the countdown or the delisting is completed within two weeks

According to the privatization roadmap previously announced by Qihoo 360, 360 is preparing to be listed on the A-share market. It is expected to pass the A-share approval by the end of December 2016 and complete the equity delivery transaction of 360 in March 2017.

The return of China Stock Exchange has made further progress, and the privatization process of Qihoo 360 has finally taken a decisive step. On the 30th, Qihoo 360 held a special shareholders 'meeting at the group headquarters to vote on the privatization agreement previously reached by the company. In the end, the agreement was approved by shareholders. This also means that 360 has officially entered the delisting stage, and the delisting can be completed within two weeks at the earliest.

After obtaining shareholder approval, Zhou Hongyi, chairman and CEO of 360 Company, also later issued a circle of friends, saying that "On the morning of the 30th, the shareholders 'meeting passed the voting result, which means that 360 has taken another step forward from delisting from the United States. I am filled with emotion."

On

June 17, 2015, Qihoo 360 announced that its board of directors had received a non-binding proposal from founder Zhou Hongyi, who said at the time that it was an active strategic choice made after repeatedly considering the current global and China capital market environment. "Many of us believe that 360's current market value of US$8 billion does not fully reflect the company's value." He said in an internal email,"I believe that privatization is an inevitable choice to maximize the value of 360 companies."

At that time, some Internet analysts pointed out that whether strategically or tactically, this may be the most complex privatization offer in history, because it is not just a matter for 360 company, but almost the entire development pace of China's Internet will be affected. Some companies that do not want to have any relationship with it, such as Baidu and Tencent, are forced to take corresponding countermeasures to check and balance.

After that, Qihoo 360 announced on December 18, 2015 that it had reached a final privatization agreement with the Investor Alliance. The Investor Alliance would acquire Qihoo 360 for approximately US$9.3 billion in all-cash, including repayment of US$1.6 billion in debt.

Under the merger agreement, the investor alliance plans to purchase all of Qihoo's issued common shares that it does not yet hold for a cash of US$51.33 per common share (equivalent to US$77 per ADS). This price is 16.6% higher than Qihoo's closing price on June 16, 2015, and 32.7% higher than the average closing price of the 30 trading days before June 16.

Investors participating in the transaction include CITIC Guoan, Ping An China, Sequoia Capital China, Taikang Life Insurance and Sunshine Insurance. Yesterday, CITIC Guoan rose 8.6%, and Ping An of China rose 2.37%. CITIC Guoan announced on Wednesday that the company has successfully established Ruiwei Fund through its controlling subsidiary Guoan Ruibo to participate in the privatization of Qihoo 360.

It is understood that after the completion of privatization, Qihoo 360 will issue approximately 15% additional option incentives and award them to the core management team, 80% of which will be given to Zhou Hongyi and 20% will be given to other core management teams.

Judging from Qihoo 360's own business, 360's products now gradually cover security software applications, smart wear, smart home, car networking and smartphones. 360 is also gradually transforming from a pure Internet security company to a secure Internet company, providing users with online to offline security services.

Industry insiders said that another China company has delisted from the United States, and U.S. stocks are now becoming less attractive to China companies. When China companies go to U.S. stocks, there are always some phenomena of being underestimated or even maliciously short. After all, they are in other people's territory.

When Qihoo 360 was IPO on the New York Stock Exchange in March 2011, it received a total of 40 times oversubscription, and its market value exceeded 10 billion US dollars at its peak. Last year, CICC analysis believed that if Qihoo 360 returns to A-share listing, its market value will be as high as 380 billion yuan (US$61.3 billion), equivalent to a nearly seven-fold expansion in market value.

However, it is only a matter of time before the 360 US delisting, but the A-share listing has encountered embarrassment. Insiders revealed that 360's delisting from the United States was in response to the innovative version launched by the Shanghai Stock Exchange. However, because the Innovation Board has not been written into the national "35th", whether or when it will be launched still needs to be studied. So, how will 360 choose?

As a familiar routine in the industry, the return of Chinese stocks mainly requires three steps: delisting (privatization) in the United States, dismantling the VIE structure and transforming it into a domestic-funded company, and applying for an IPO in China. The Chinese stock companies that implement the VIE agreement are still unable to meet the domestic IPO review and listing requirements due to the transfer of most of their revenue and profits to the counterparties of the agreement. When time is efficiency, the backdoor listing time period is the shortest, making it the most effective way.

Looking back over the past year, six companies have announced backdoor purchases: Home Inns has backed up First Travel Hotel, Xueda Education has backed up Yinrun Investment, Shanda Games has backed up Zhongyin Cashmere Industry, Focus Media has backed up Qixi Holdings, Giant Network has backed up Century Cruises, SouFun has backed up Wanli shares.

In fact, this year's return boom for China's stocks has not abated. On January 19, Zhaopin Recruitment announced that it had received a non-binding privatization offer. On February 1, Ku6 Media announced that it had received a privatization offer from controlling party Shanda. Recently, Jumei Premium announced that it had received privatization applications from company CEOs Chen Ou, Sequoia Capital, etc., and was preparing to privatize at a price of US$7 per ADS. An investment banker from an eastern brokerage firm also said,

"In the future, China's stocks can return through IPO queuing, backdoor listing, and listing on the New Third Board. Due to the poor liquidity and valuation of the New Third Board, China Stock Exchange will return or will be the first choice for backdoor listing. This is also one of the reasons why some low-market-value shell resource stocks have been hyped."

Therefore, the outside world has speculated that Qihoo 360 is likely to enter the capital market by borrowing A-share companies in the future. Previously, there were rumors that many A-share listed companies such as Bird, Green Alliance Technology, Dongyuan Electric (now Guoxuan High-Tech), and Huamei Electronics might be backed by Qihoo 360, but they were quickly denied by relevant senior officials.

According to the privatization roadmap previously announced by Qihoo 360, 360 is preparing to be listed on the A-share market. It is expected to pass the A-share approval by the end of December 2016 and complete the equity delivery transaction of 360 in March 2017.

Editor: yvonne