✔️ 2022-06-15 10:03:35 – Paris/France.
By Julie Zhu and Kane Wu
HONG KONG (Reuters) - Chinese internet search engine giant Baidu Inc is in talks to sell its majority stake in iQIYI Inc, China's answer to Netflix, in a deal that could value all of iQIYI at around $7 billion, two people with knowledge of the matter said.
Baidu, which owns 53% of iQIYI and holds more than 90% of its shareholders' voting rights, plans to sell all of its stakes in the Chinese service company. Streaming video, said these two people and two other sources familiar with the matter.
iQIYI, listed on the Nasdaq, has a market value of $4 billion. Baidu's targeted valuation of $7 billion for the entire company upon its divestiture would represent a price of around $8,13 per share from its last close of $4,67.
The four people with knowledge of the plan declined to be identified due to confidentiality constraints.
The divestment plan, previously undisclosed by Baidu, comes after the company deemed iQIYI a non-core asset, and as it seeks to focus more on developing its artificial intelligence and self-driving units in capital-intensive, the first two sources said. .
Baidu, whose business ranges from internet search to electric vehicles, with an expansion of cloud services, robotaxis and self-driving in recent years, has tapped Bank of America to work on the potential sale, the company said. second pair of sources.
Baidu did not respond to a request for comment, while Bank of America had no immediate comment.
"This is purely a market rumour," iQIYI said in a statement emailed to Reuters, without providing further comment.
The plan to sell stakes drawn up by Baidu, worth nearly $50 billion in market value, comes amid China's regulatory crackdown since late 2020 on tech companies, private education and other sectors, which hammered their shares and forced some to reduce their expansion. in non-essential areas.
iQIYI's participation attracted initial interest from a number of financial sponsors and public companies, three of the four sources said, including Hong Kong-based private equity firm PAG.
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China Mobile, the world's largest mobile network operator by number of subscribers and service owner of Streaming Migu Video is also among the potential buyers, said two of the people with knowledge of the matter.
PAG declined to comment. China Mobile did not respond to a request for comment.
If Baidu hits its valuation target, it would represent a more than 100% premium to iQIYI's average stock price over the past three months of $3,97. The shares of the company Streaming have lost 70% in the past 12 months amid a sell-off in Chinese tech stocks.
The terms of the deal have yet to be finalized and are subject to change, the sources said.
(Reporting by Julie Zhu and Kane Wu; Editing by Sumeet Chatterjee and Kenneth Maxwell)
SOURCE: Reviews News
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