Sohu And Sogou Ink Definitive Agreements On Sogou Going-private Transaction

Sohu.com Limited (SOHU), a Chinese online media, video, search and gaming business group, said Tuesday that its subsidiary Sogou Inc. (SOGO) has entered into a definitive agreement and plan of merger with THL A21 Limited, TitanSupernova Limited, and Tencent Mobility Limited, collectively known as the Tencent Parties.

Each of these companies is a direct or indirect wholly-owned subsidiary of Tencent Holdings Limited (TCTZF.PK,TCEHY.PK). Pursuant to agreements, Titan Supernova will be merged with and into Sogou in an all-cash transaction, and Sogou will become an indirect wholly-owned subsidiary of Tencent.

Sohu.com is currently Sogou's indirect controlling shareholder through the its wholly-owned subsidiary Sohu.com (Search) Limited.

Sohu.com said that on or about the same time as Sogou entered into the merger agreement, Sohu.com and Sohu Search entered into a share purchase agreement with TitanSupernova.

Under the share purchase deal, Sohu Search has agreed to sell all of the Sogou Class A ordinary shares and Sogou Class B ordinary shares owned by it to TitanSupernova for $9.00 per share, which is equal to the per-share merger consideration under the merger agreement.

On completion of the share purchase, Sohu Search will receive aggregate consideration of about $1.18 billion in cash, and Sohu will no longer have any beneficial ownership interest in Sogou.

Upon the effectiveness of the merger, outstanding Sogou Class A ordinary shares, including those shares represented by American depositary shares will be cancelled in exchange for the right of the holders to receive $9.00 in cash per Sogou Class A Ordinary Share or Sogou ADS.

The merger consideration represents a 56.5 percent premium to the closing trading price of the Sogou ADSs on July 24, 2020, the last trading day prior to Sogou's announcement of its receipt of a "going-private" proposal from Tencent. The merger is currently expected to close in the fourth quarter of 2020.

If completed, the share purchase and the merger will result in Sogou becoming a privately-held indirect wholly-owned subsidiary of Tencent.

Sogou ADSs will no longer be listed on the New York Stock Exchange, and the Sogou ADS program will be terminated.

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