What happened: Tencent Holdings Limited (“Tencent”) sent a preliminary, non-binding offer to acquire the search engine operator Sogou for $2.1 billion. According to a press release, Tencent intends to finance the proposed acquisition with cash, and it is offering $9 in cash for each outstanding ordinary share, including ordinary shares represented in American depositary shares of Sogou that aren’t currently owned by Tencent or its affiliates).
Meanwhile, Bloomberg reports that Tencent Holdings Ltd., which owns a 37-percent stake in the gaming leader Huya Inc. and 38 percent of DouYu International Holdings Ltd., is seeking a merger between the two dominant gaming industry players.
Jing Take: This strategic move proves that Tencent is intent on becoming one of the world’s largest video game-streaming service platforms and that it’s also eyeing new opportunities in content marketing that could drive leads and sales. The Sogou buyout could offer it the opportunity to consolidate the search functions of its messaging and its social media platform (WeChat) while inhibiting competition from both Baidu and ByteDance.
Also, by integrating Sogou’s Mobile Keyboard app, which is the largest input app for Chinese characters and includes both voice typing and searches, Tencent could soon be able to reach consumers who are too lethargic to type their queries. That would give Tencent the use of even more consumer data for its data-driven marketers. Lastly, the move would also consolidate the company’s position in the booming smart speaker market.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.