Sohu, one of China’s oldest internet companies, announced Monday in a filing with the US Securities and Exchange Commission a preliminary non-binding proposal to buy all of the outstanding Class A ordinary shares represented by American Depositary Shares (ADSs) of its subsidiary online gaming company Changyou.
Sohu, which already holds 90% voting power of Changyou, said it is willing to pay USD 10 per ADS in cash, which would represent a premium of 57% over the average closing price of Changyou’s ADSs during the last 30 trading days.
Sohu already owns all of the outstanding Class B ordinary shares of Changyou, and if the expected transaction will be completed, it will result in Changyou becoming a privately-held, fully-owned subsidiary of Sohu, as every Changyou’s ADSs will be removed from the NASDAQ Global Select Market.
Changyou’s shares have risen 54.73% to USD 9.16 at pre-market trading hours. The company’s current market capitalization is USD 305.6 million.
Sohu, the company behind China’s second-largest search engine Sogou, has been loss-making for years. The firm made USD 475 million in total revenues and booked USD 50 million in net losses in the second quarter of this year.
Search and related advertising revenues were USD 276 million, up 2% year-on-year and 18% quarter-on-quarter, while online game revenues were USD 102 million, up 8% year-over-year and 3% quarter-over-quarter.