Qihoo Joins Other Chinese Company To Go Private

Chinese Internet security company, Qihoo 360 Technology Co. announced its plan to go private after reaching agreement to sell its stock to buyers.

According to Wall Street Journal the company made an announcement on Friday that it would go private for roughly $9.3 billion, including debt, six months after its chairman first proposed a deal. A group of buyers will pay $77 an American depository share, which matches earlier offer. The consortium of buyers led by Qihoo Chairman Zhou Hongyi and including Sequoia Capital China and Citic Guoan.

Qihoo 360 Technology Co. is an Internet security company that sells antivirus software and Internet related software product, founded in 2005. Qihoo also entered the smartphone market since 2012 in collaboration with Haier, the Chinese electronic giant. Last August, Qihoo launched its own smartphone product Qiku.

The company was listed in New York Stock Exchange in March 2011 and it recorded as the biggest initial public offering by a Chinese company in the U.S. at that time. During its IPO, Qihoo 360 raised $175 million and the share was up up 134% on its first day of trading. The company's share continued to perform well in the NYSE afterward.

Reuters reported that Qihoo 360 is raising a US$3.4 billion equivalent loan to back its buyout, and the remaining US$5.9bn will be funded by the consortium, The consortium that takes Qihoo 360 private besides Citic Guoan and Sequoia Capital China also comprised of: Golden Brick Silk Road Capital, Taikang Life Insurance, Ping An Insurance, Sunshine Insurance, New China Capital, Huatai Ruilian, and Huasheng Capital.

The privatization of Qihoo 360 was the last of series Chinese listed company that went private. Other Chinese companies that went private, according to Reuters, are Mindray Medical International, WuXi Pharma Tech Inc. and Trina Solar Ltd. Those companies also delisted from New York Stock Exchange with loans provided by Chinese banks which have not been syndicated.

According to Bloomberg the Qihoo 360 buyout shows the new Chinese companies interest in delisting from U.S. exchanges to sell equity in China at higher valuation. Although the takeover bid was slowdown after Chinese stocks plunged earlier this year, they are coming back as Chinese market has stabilized. Qihoo successful buyout will increase more interest.

An analyst from Granite Point Capital Inc, Chiheng Tan said, "People were worried that the Qihoo deal might fall apart because of its gigantic size, but since a deal as big as Qihoo didn't have a problem getting financed, more Chinese companies may follow suit."

A successful buyout deal of Qihoo 360 will surely initiate a new wave of Chinese companies to go private and shift listings to China.