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Is Weibo Going Private in Response to Proposed Senate Rules?

By Danny Vena – Updated Jul 6, 2020 at 3:48PM

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The parent company of China's Twitter got a buyout offer from its CEO. This is the latest development in a wave of Chinese companies going private.

China-based online media company Sina (SINA) announced on Monday that it has received an offer to take the company private. Sina is the parent company of micro-blogging site Weibo (WB -3.98%), best known as the Chinese equivalent of Twitter

The take-private proposal came from New Wave, a holding company controlled by Sina's CEO, Charles Chao. The deal offered $41 in cash per share, which would represent a 12% premium from the stock's closing price on Thursday and value the transaction at about $2.7 billion. New Wave already holds a 12% stake in Sina. 

3 young people looking at smartphones oblivious to one other.

Image source: Getty Images.

Sina released a statement saying its board of directors had formed a committee of independent directors to evaluate the proposed deal.

The company spun off Weibo in 2014, but still holds a controlling stake, owning 45% of its shares and 71% of the voting rights.

Rising tensions between China and the U.S.

The U.S. Senate approved legislation back in May that imposes a number of strict criteria on foreign companies trading on U.S. stock exchanges. Companies would be required to certify that they are not owned or controlled by a foreign government, while also submitting their audit results to U.S. regulators for review. Businesses that failed to comply with the regulations could be barred from U.S. exchanges. The measure still has to be approved by the House of Representatives.

This move has sparked a wave of Chinese companies going private in recent months. Online classified ad company (WUBA) and auto sales website Bitauto Holdings (BITA) have both agreed to private takeover offers over the past month.

Other companies are considering abandoning the U.S. markets and listing on exchanges in Hong Kong or Shanghai. Search giant Baidu (BIDU 1.69%) is reportedly considering delisting from the Nasdaq stock exchange in reaction to the proposed legislation.

Danny Vena owns shares of Baidu and Weibo. The Motley Fool owns shares of and recommends Baidu and Twitter. The Motley Fool recommends Nasdaq, Sina, and Weibo. The Motley Fool has a disclosure policy.

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Stocks Mentioned

SINA Corporation Stock Quote
SINA Corporation
Weibo Corporation Stock Quote
Weibo Corporation
$16.42 (-3.98%) $0.68
Baidu, Inc. Stock Quote
Baidu, Inc.
$119.48 (1.69%) $1.99
Bitauto Holdings Limited Stock Quote
Bitauto Holdings Limited
BITA Inc. Stock Quote Inc.

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