Weibo denies Reuters report of company going private

Weibo Corporation has denied that the company is going private, refuting a recent Reuters article which reported that chairman Charles Chao and a state investor are in talks to take the company private. In a statement, the company said Chao has informed Weibo that the information is untrue and he has had no discussion with anyone regarding the privatisation of the company.

Just yesterday on 6 July, Reuters ran an article that said the deal to go private could value Weibo at more than US$20 billion. Quoting its sources, Reuters said Weibo's intention to go private comes as Alibaba Group is being pushed by the Chinese government to divest its media assets. It added that the plan could also aid in the exit of its shareholder Alibaba and potentially see Weibo relist in China "to capitalise on higher valuations", Reuters said. It added previously that Chao's holding company, New Wave, which is also reportedly Weibo's top stakeholder, is partnering with a state company based in Shanghai to create a consortium for the deal.

According to Reuters, the group reportedly hopes to finalise the deal this year and the consortium plans to offer about US$90 to US$100 per share to take the company private. Alibaba first bought an 18% stake in Weibo in 2013 through a US$586 million investment as part of the former's move into selling ads on Chinese social platforms. For its fiscal year 2020, Weibo reported advertising and marketing revenues of US$1.49 billion, marking a 3% year-on-year dip. Meanwhile, advertising and marketing revenues for the fourth quarter of last year were US$453.5 million, an increase of 12% year-on-year.

Separately, the Chinese government has been clamping down on tech firms over the past few months. China's State Administration of Market Regulation (SAMR) recently blocked Tencent Holdings' merger of the top two videogame streaming sites, Huya and DouYu, after the company allegedly failed to meet SAMR's requirements on giving up exclusive rights.

Chinese cybersecurity watchdog, Cyberspace Administration of China, also asked ride-hailing company Didi Chuxing to remove itself from app stores due to "serious violations" on its collection and usage of personal information. The company was also slapped with an antitrust probe by SAMR last month, with the regulator investigating whether Didi engaged in any anti-competitive practice that "unfairly squeezed out" smaller rivals.

Separately in April, China's market regulator hit Alibaba Group with a US$2.8 billion antitrust fine. In that same month it also prepared "a substantial fine" for Tencent Holdings, Reuters reported. A month later, the Cyberspace Administration of China found 105 apps to have violated laws by "excessively collecting and illegally accessing users’ personal information", the Associated Press said. The apps include Douyin, Bing and LinkedIn.

Photo courtesy: 123RF