China’s Qihoo to acquire HK-listed Vision Values
Chinese internet security software provider Qihoo360 Technology, which recently received a take-private offer from its management and VC investors, intends to acquire a majority stake in Hong Kong-listed Vision Values. It is suggested Qihoo might seek to re-list in Hong Kong via a reverse merger.
The People’s Insurance Company of China (PICC) and its subsidiary PICC Property and Casualty (P&C) are participating as co-investors.
According to a filing, Vision Values is issuing 6.6 billion shares for PICC and PQ Investment - an investment vehicle owed by Qihoo and PICC P&C - at HK$0.18 apiece, representing a discount of 90.77% to the last closing price. PQ Investment will acquire 5.8 billion shares while PICC will take the remaining 855 million shares, which represents a total of 70.81% of the enlarged issued share capital of the company.
Vision Values is also issuing 150 million new shares to individual investor Wilson Hui, an executive director at Haitong International.
Hong Kong-listed Vision Values is an investment holding company operating in network solutions as well as property investment in Hong Kong and mainland China. The company's revenue dropped to HK$22.3 million last year from HK$37.3 million in 2013. It made a loss of HK$14.1 million in 2014, compared to a profit of HK$7.6 million in 2013.
Two months ago, Qihoo's chairman and CEO, plus CITIC Securities, China Renaissance Holdings and Sequoia Capital offered to takeover Qihoo from the US in a bid that valued the company at approximately $9.9 billion.
Qihoo generated revenues of $1.39 billion in 2014 - primarily from online advertising, value-added services and enterprise and IT systems services - compared to $671.1 million the previous year. Net income rose from $99.7 million to $222.8 million over the same period.
Hongyi Zhou, Qihoo's chairman and CEO, owned a 16.2% stake in the company as of December 2014, while Sequoia had 1.5%. CITIC, China Renaissance and the final named member of the consortium, Golden Brick Capital Private Equity Fund I, do not appear in the shareholder roster.
Sequoia was among the company's first backers in 2006. Qihoo also received capital from a host of other VC and PE investors before going public on the New York Stock Exchange in 2011.
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