Sina gets buyout offer from CEO-led company

Online media company Sina Corp, the owner of the Twitter-like platform Weibo, has received a buyout offer from an entity led by its chairman and CEO Charles Chao, in a deal that would take the Nasdaq-listed company private.

Experts said the Chinese internet sector has been witnessing a spree of go-private and secondary listing deals this year, and Sina is the latest to seek a go-private deal.

Following the go-private plan, investors and managers will be able to adjust Sina's development strategy to grow the business and then opt for a secondary listing on the Chinese mainland or in Hong Kong to hedge against uncertainties in the United States, they said.

Sina said in a Monday filing that New Wave MMXV Ltd, a British Virgin Islands-based company that Chao controls, proposes to acquire all outstanding ordinary shares not already owned by it at $41 per share in cash.

The offer represents a 20-percent premium on the average closing price of ordinary shares during the last 30 trading days. Sina shares jumped by 10.55 percent in regular trading on Monday following the news.

"The offer comes at a time when Sina remains undervalued on the US market," said Kuang Yuqing, founder of Lens Company Research.

Sina has a current market capitalization of $2.65 billion, as of Monday's closing share price of $40.54. It owns about 45 percent of Weibo. Weibo has a current market capitalization of $9 billion, also based on Monday's closing share price of $39.78.

So, Sina's 45 percent-stake in Weibo is worth around $4 billion given the current value being assigned to the latter by investors, suggesting that Sina is undervalued on the market, Kuang said.

Ouyang Rihui, assistant dean of the China Center for Internet Economy Research at the Central University of Finance and Economics, said as one of China's oldest web portals, Sina is lagging behind its rivals, as it failed to grasp the new opportunities in the age of mobile internet. Following the go-private deal, Sina will be able to boldly take new moves without considering the market reaction, such as strategy and management adjustment and the introduction of new investors, Ouyang said.

In recent years, Weibo has become Sina's main growth engine, as Sina's traditional news services lagged behind rivals such as Tencent, NetEase and Jinri Toutiao.

Sina said its total revenue declined by 8 percent on a yearly basis to $435.1 million during the first quarter of this year. The slump was led by a 20-percent fall in advertising revenue to $310 million, primarily due the adverse effect of the coronavirus epidemic on the overall advertising demand, Sina said.

Chen Duan, executive director of the Zhongjing Digital Economy Research Center, said Chinese firms' go-private plans and the secondary listings on the Chinese mainland or in Hong Kong will boost company valuations and capital for diversified development.