A recent announcement by leading Chinese social media platform Weibo revealed that it plans to acquire 100% equity of Sina Technology (China) Co., Ltd., leading to speculation that it will also acquire Sina, its parent company. On December 25, Weibo responded to domestic media, saying that the announcement actually referred to its acquisition of a Sina subsidiary, which also holds a number of assets, including the main Sina building. Sina Group holds many subsidiaries and corresponding businesses, and this deal does not involve any change in the management relationships between them.
On the evening of December 23, Weibo announced that Weibo Hong Kong Limited, a wholly-owned subsidiary of the company, and Sina Hong Kong Limited, a wholly-owned subsidiary, had entered into several agreements on buying and selling 100% equity of Sina Technology (China) Co., Ltd.
Accordingly, Weibo Hong Kong Limited agreed to purchase the entire equity of Sina Technology (China) Co., Ltd. for a total consideration of about 1.5 billion yuan ($214.9 million).
The delicate relationship between Sina and Weibo has triggered discussion in the market and has become an important motivation for Sina’s privatization.
Sina and Weibo, as parent and subsidiary companies, were both publically listed. However, with the increasing transformation of Weibo and Sina’s revenue capacity, the irrationality of this capital structure increasingly dissatisfied some investors. When Sina was privatized last year, the market value of Weibo was more than four times that of Sina.
This acquisition is another adjustment of the company structure after Sina delisted from the Nasdaq last year. Some brokerage analysts believe that this move may be Sina’s capital treatment to further rationalize its company structure.
When the company privatized in March of 2021, it announced that Sina would be renamed as “Sina Group Holding Company Ltd.” and become a private enterprise jointly controlled by its chairman Charles Chao and Sina management.
On the day of completion of the acquisition, Charles Chao stated through an internal letter that privatization is not the end of an era, but a new structure to better fight for the future. He added that after privatization, Sina is still the controlling shareholder of Weibo.