Shares of Chinese tech firm Qihoo 360 Technology Co. climbed to their highest following reports that the company was nearing completion of a buyout deal. (Photo : www.allchinatech.com)
Qihoo 360 Technology Co.’s shares rose to their highest following reports that the company was nearing completion of a buyout deal first announced in June, China Daily reported.
Qihoo's shares jumped 3 percent to $69.96 in the New York Stock Exchange.
The paper reported on Tuesday, Dec. 1, that the company's transaction to go private is expected to be completed in the coming weeks.
The report said that the deal, with an original value of $8.4 billion, would require the shares to be re-listed on a Chinese exchange. The offer that Qihoo received in June, equivalent to $77 per American depositary receipt, would be a 13-percent premium to Monday's closing price of $67.9.
Some 34 Chinese companies on U.S. exchanges have announced privatization deals this year totaling $32 billion. The buybacks, however, got stalled in June after a $5 trillion mainland stock market retreat and a freeze on initial public offerings. It is now resuming as investors and executives try to shift stock listings to China to unlock valuations that some foreign investors may not appreciate.
"It shows that Chinese capital is still very enthusiastic about taking those ADRs home," Henry Guo, an analyst at Summit Research Partners who covers Chinese companies, said. "Investors earlier were worried that these companies would have difficult time raising money in China. More Chinese companies may follow suit if Qihoo can go home successfully."
A Bloomberg survey showed that regulators lifted the hold on IPOs after equities bounced back, and 28 offerings (including 10 this week) would amount to a total of 3.4 trillion yuan ($531.3 billion) of funds by the end of the year.
The report said that Chinese technology companies are the primary target of ADR buyouts since they are cheap compared with their A-share peers on the mainland.
According to Bloomberg data, Qihoo is trading at 16 times projected 12-month earnings, compared with an average multiple of 58 among global peers.
