Did Sina’s Management Just Take Over the Company?; Chinese Press Says “Yes” With A Smile

The following is my latest post on Digital East Asia.

Following up on Doug’s earlier post, I would like to point out what the Chinese media has deemed to be the bigger story for Sina – the $180MM equity financing. This was quite casually mentioned in Wall Street Journal’sarticle on the failed acquisition of Focus Media Holding Limited ((ADR) NASDAQ: FMCN) by Sina Corporation ((USA) NASDAQ: SINA). However the Chinese press and blogosphere seems to be having a field day over this (example: check out this special feature by Techweb, in Chinese), calling it Sina’s MBO (management buyout).

The significance in the financing is that Sina’s management now has stronger control over the board, after acquiring a 9.41% stake and becoming the No.1 shareholder (Sina’s poison pill plans prohibit institutional investors from acquiring more than 10%).

Influential Chinese tech blogger Keso (somewhat sentimentally) comments that (link in Chinese, below my translation):

“… This should have happened a long time ago, but I never expected it to actually happen. Sina’s shares are extremely diversified, with no controlling shareholder that is responsible for the company’s future. This is why for 9 years since Sina’s public offering, it has always been a great tool for capital market manipulation, but never really anyone’s enterprise. CEOs are changed like a circus show, and the company’s market value is now less than 3/4 of Sohu…

… Now that Sina people are biggest shareholders, for the first time they have the right dream about the company’s future. I like this change.”

Rich Tong, MD of Qiming Venture Partners, shares with the press (link in Chinese) that the move was probably spurred by the likely failure of the Focus Media acquisition, and that he expects Sina to make some pretty big moves in the coming 12 months.

Sina CEO Charles Chao revealed (link in Chinese) that plans for the “MBO” began two months ago, and hints that Sina will focus on growing vertically, for example in its real estate site, video and mobile. Management apparently wants to spin-off these vertical properties – for example a few months ago there was news of Sina’s real estate site merging with E-House, and now it seems there are plans for a US IPO for this JV.

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