Chinese e-commerce firm Alibaba held the largest IPO in U.S. history last year, but going public isn’t all sweetness and roses for every Chinese tech firm. In fact, a resurgent public market coupled with increased private equity has made the ideal of listing domestically — or, not being public in the U.S. — more appealing.
Those look like the reasons why Qihoo 360, one of the country’s influential tech companies, is moving to delist from the New York Stock Exchange.
The company, which started out providing anti-virus solutions but offers a range of mobile and internet services, this week announced a proposed buyout led by chairman and CEO Zhou Hongyi. At $77 per share, the offer is worth around $9 billion and represents a 17 percent premium on the company’s valuation as of end of day Tuesday. Indeed, the Wall Street Journal reports that, if successful, it would be “the largest take-private deal of a U.S.-listed Chinese company”.
Qihoo 360 didn’t say exactly why it is working to delist, but a number of factors are worth considering.
China’s own stock market is booming, and it could be that Qihoo 360 sees more value in being a public company at home rather than overseas. Indeed, related to that, the company and its services aren’t particularly known in the U.S..
Added to that, China is offering attractive sweeteners to lure tech companies into working more closely with the national stock market. Our partner publication Technode reports that China’s State Council has committed significant resources in the form of subsidies and free office space in designated startup and innovation hubs like Shenzhen and Suzhou.
Listening in the U.S. was a popular option for Chinese tech companies last year, so it will interesting to see if Qihoo 360’s move is a canary in the coal mine moment, or a one-off decision from a company that has struggled to manage its image outside of home turf.