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Sina CEO Charles Chao
Spencer Platt/Getty Images
Sina
said on Monday that its chairman and chief executive, Charles Chao, had offered to take the company private for $41-a-share in cash.
Sina (SINA), a China based news outlet that also owns a controlling stake in the social media service
Weibo
(WB), says its board has formed a special committee to review the offer, and that no decision has been made on whether to accept the bid.
The offer comes from New Wave MMXV, a British Virgin Islands-based company that Chao controls. In a letter to the Sina board, Chao notes that the bid price comes at a 20% premium to Sina’s average price over the last 30 trading days. New Wave already holds a 12.2% equity stake and 58% voting rights in Sina shares.
Citigroup analyst Alicia Yap notes in a research note that the deal is “highly likely to through,” and would mark the end of an era: Sina was the first Chinese internet company to list on a U.S. stock exchange. Sina started trading here in April 2000.
Yap also notes that Sina has a 44.9% equity stake and 71% voting control of Weibo—and some investors apparently think the deal has positive implications for Weibo’s future status. Weibo shares spiked 19%, to $40.13, following the news.
Yap points out that Sina’s Weibo stake is worth $3.43 billion, which is above the current $2.65 billion valuation for Sina shares.
“While we are not totally surprised by the proposal given the underlying value of Sina and its under-appreciation by investors for a long time, we believe that New Wave could still offer a bit more generous pricing than $41 a share.”
In early afternoon trading on Monday, Sina shares were up 10.4%, to $40.49.
Write to Eric J. Savitz at [email protected]
