Chinese Internet search giant Baidu, Inc. (BIDU: Quote) Wednesday said its wholly-owned subsidiary Baidu (Hong Kong) Ltd., has signed a definitive merger agreement to acquire a 100 percent equity interest in 91 Wireless Websoft Ltd., for $1.85 billion in cash, after considering a special dividend.
It was on July 15, 2013, the companies signed a memorandum of understanding to acquire 91 Wireless for a merger consideration of $1.90 billion or approximately HK$14.74 billion. After considering the conditional declaration of a special dividend totaling about $52.06 million by 91 Wireless to its existing shareholders, the company now adjusted the consideration to $1.85 billion or around HK$14.34 billion.
Baidu expects to close the deal in the fourth quarter of 2013, subject to customary closing conditions and approval by NetDragon's independent shareholders at an extraordinary general meeting.
91 Wireless is one of the mobile app marketplaces and mobile game operators in China. Baidu is acquiring 91 Wireless from NetDragon Websoft Inc., and other shareholders. According to the firm, 57.4 percent of the total stake is owned by NetDragon, and the remaining shares from other shareholders.
The company noted that last month, Baidu and 91 Wireless users in China together downloaded a daily average of 69 million apps, the large majority of which were downloaded directly from mobile devices.
Robin Li, chairman and chief executive officer of Baidu said, "The acquisition of 91 Wireless significantly strengthens our mobile app distribution capability, and further enhances Baidu's prime position in China's thriving mobile ecosystem."
Following the completion of the deal, 91 Wireless will become a wholly-owned subsidiary of Baidu and will continue to operate under its existing management team as an independent company.
In a separate announcement, NetDragon said it estimated net proceeds from the transaction to be around $1.060 billion or HK$8.230 billion. The company said 50% will be used as special dividend to existing NetDragon shareholders, while 20% will be used for further investments in existing business.
10% will be used for potential merger and acquisition opportunities in the mobile game business and other attractive opportunities and 10% will be used to capture new high growth opportunities. Remaining 10% will be applied as working capital and for corporate purposes.
BIDU closed Tuesday's regular trading session at $141.53 on the Nasdaq.
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by RTT Staff Writer
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