Sohu says no plan for privatization

NASDAQ-listed Sohu.com Inc, one of China's largest Internet firms, denied Wednesday a media report that it plans to privatize, despite some analysts' belief that delisting from the US capital market is a good choice for the Beijing-based firm.

Sohu is not talking to investment banks or private equity funds about any plan to take the company private or de­list its stock from the NASDAQ, Sohu said in an announcement Wednesday.

"No such discussions are in progress or currently contemplated," said Yu Chuyuan, co-president and Chief Financial Officer of Sohu.

Yu was responding to a report in the Hong Kong newspaper South China Morning Post, which cited four sources Wednesday as saying that Sohu had recently talked to investment banks and private equity funds about a possible privatization plan because Sohu founder and chairman Charles Zhang believed Sohu's share price to be significantly undervalued.

Following the report, Sohu's stock price closed up 12 percent to $48.84 Tuesday (Wednesday Beijing time).

The company is cash-rich enough to freely decide whether to go private, and the move would not be surprising considering its subsidiaries have already been listed or plan to list, Zhong Rixin, an analyst with Beijing-based financial services information provider imeigu.com, told the Global Times Wednesday.

Sohu's online gaming firm Chang­You.com went public on the NASDAQ in 2009, and Changyou-owned game company Shenzhen 7Road Technology Co has already submitted an application for a US listing. Sohu's search engine firm Sogou, as well as Sohu's video division, are also reportedly considering listing, Zhong said.

"As the parent company of these listed and ready-to-list subsidiaries, it is unnecessary for Sohu to keep itself listed," he said.

Sohu, which invests in gaming, search engine and video businesses with growth potential, is in an awkward position in the capital market, and it hopes to gain objective market recognition, Li Zhi, an analyst with Beijing-based Internet research firm Analysys International, told the Global Times Wednesday.

Sohu's market value totals $1.86 billion, lower than major rival NetEase Inc's $6.96 billion and SINA Corp's $3.34 billion, and even lagging behind some single-focus businesses such as video website Youku Tudou Inc's $3.09 billion. Charles Zhang has long criticized Wall Street for undervaluing his company.

Analysts believe that Sohu will privatize sooner or later in order to restructure the assets of its expanded business lines, even if it does not plan to delist at the moment.

For similar considerations, Internet firms Shanda Interactive Entertainment and alibaba.com both privatized in 2012, and display advertising firm Focus Media also sought privatization last year.

A total of 22 US-listed Chinese companies had completed privatization or were in the process of privatizingbetween January 1 and November 20, 2012, imeigu.com said.