360 privatization investors want to exit, and Zhou Hongyi holds 13.26% of the shares and is still the largest shareholder

Blue Whale Finance

2024-08-03 13:36Posted on the official account of Beijing Blue Whale Finance

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01360 announced the dissolution and liquidation of Tianjin Qixin Zhicheng Technology Co., Ltd., the controlling shareholder, and Zhou Hongyi will become the largest shareholder.

02 After the dissolution of Qixin Zhicheng, Zhou Hongyi's direct shareholding in 360 will increase from 5.24% to 13.26%.

03 Since the latest market value of 360 is 54.3 billion yuan, which is lower than the overall consideration at the time of privatization, if the privatization investor withdraws, the return on investment will not be ideal.

04 During the liquidation process of Qixin Zhicheng, Zhou Hongyi will share the shareholding reduction quota of major shareholders with Hu Huan, and the total number of shares to be reduced by centralized bidding within any 90 consecutive days shall not exceed 1% of the total number of shares of 360.

05Although the performance of 360 has been poor in recent years, Zhou Hongyi still firmly controls the appointment and dismissal of the company's directors and management team.

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Blue Whale News, August 3 (Reporter Zhang Yandi, Wang Jianwen) Eight years ago, Qihoo 360, which suffered a short-selling crisis, was privatized by Zhou Hongyi and Sequoia, Everbright, CITIC Guoan, Ping An and other consortiums at a valuation of 9.3 billion US dollars. Subsequently, 360 was re-listed on the A-share market in 2018. Now, the issue of the withdrawal of privatization consortiums is on the agenda, and the latest market value of 360 is 54.3 billion yuan.

On the evening of August 2, 360 officially announced that the company's controlling shareholder, Tianjin Qixin Zhicheng Technology Co., Ltd. (hereinafter referred to as "Qixin Zhicheng"), would be dissolved and liquidated. After the dissolution, Zhou Hongyi's direct shareholding ratio of 360 will increase from 5.24% to 13.26%, replacing Qixin Zhicheng as the largest shareholder of 360, and the status of the actual controller will remain unchanged.

The privatization platform Qixin Zhicheng was finally dissolved

360, formerly known as Qihoo 360, was privatized and delisted from the U.S. stock market in 2016. Founded in December 2015, Qixin Zhicheng is a privatization platform composed of Zhou Hongyi and 36 investors, and currently holds 3.297 billion shares of 360 Company, accounting for 46.14% of the total share capital of the listed company.

The consideration for the privatization of Qihoo 360 is up to US$9.3 billion, including a loan of approximately US$3.4 billion from a syndicate led by China Merchants Bank, with principal and interest repayments scheduled from December 2018 to June 2023. According to the announcement, the principal and interest of the aforementioned syndicated loan of Qixin Zhicheng as stipulated in the "Shareholders' Agreement" have been fully repaid in 2023.

At the time of privatization borrowing, all shareholders of Qixin Zhicheng pledged their shares of Qixin Zhicheng to China Merchants Bank, and all the pledged shares of Qixin Zhicheng were released in July 2023. According to the agreement, after the loan is repaid, any shareholder can propose to dissolve Qixin Zhicheng.

According to the announcement on August 2, the liquidation of Qixin Zhicheng will be completed in the next 12 months.

Privatization investors reduced their holdings and exited

In February 2018, Jiangnan Jiajie was listed on the backdoor and landed in the capital market, with a market value of more than 440 billion yuan, becoming a historical high. Since then, the share price of 360 has been declining, and the latest market value has fallen to 54.3 billion yuan, which is already lower than the overall consideration at the time of privatization.

This also means that if 360's privatization investors exit at this time, the return on investment will not be ideal.

After the dissolution of Qixin Zhicheng, how investors in the past reduced their holdings and exited became the focus of market attention. According to the new regulations on shareholding reduction issued by the regulatory authorities this year, if a major shareholder of a listed company reduces its shareholding due to divorce, termination of a legal person or unincorporated organization, or division of the company, the transferor and transferee of the shares shall continue to jointly comply with the provisions of the new regulations on the reduction of shareholdings by major shareholders after the transfer of shares.

According to the announcement, under the premise that Zhou Hongyi promised not to reduce his holdings in the next 12 months, during the liquidation process of Qixin Zhicheng, Qixin Zhicheng will share the reduction quota of major shareholders with Zhou Hongyi and Hu Huan, and the total number of shares reduced by centralized bidding within any 90 consecutive days shall not exceed 1% of the total number of 360 shares, and the total number of shares reduced by block transactions shall not exceed 2% of the total number of 360 shares, and Zhou Hongyi will transfer 9.0989% of the reduction quota to Qixin Zhicheng (liquidation group).

After the liquidation of Qixin Zhicheng, the shareholders of the consortium will become the direct shareholders of 360, but they still need to share the shareholding reduction quota with Hu Huan, but the shareholders (including any two and/or more members) may voluntarily negotiate to adjust their respective shareholding reduction quotas. The 360 announcement disclosed the specific distribution ratio of the shareholding reduction quota of each shareholder of Qixin Zhicheng.

Guard control

With the dissolution of Qixin Zhicheng, 360's equity will become very dispersed, although Zhou Hongyi is still the company's largest shareholder and actual controller, but the shareholding ratio is only 13.26%, and it will become extremely important to stabilize the control of listed companies.

(Image source: 360 Announcement)

According to the announcement, during the liquidation of Qixin Zhicheng, the liquidation group entrusted Zhou Hongyi to exercise the voting rights of shareholders of listed companies involving Qixin Zhicheng. And, unless Zhou Hongyi agrees, the appointment and dismissal of 360's directors and management team will be firmly controlled by Zhou Hongyi.

After the completion of the liquidation, as long as Zhou Hongyi is still the largest shareholder, controlling shareholder and actual controller of 360, the shareholders of the consortium shall not attempt to replace Zhou Hongyi's position, and will give up the voting rights of the shares of the listed company distributed in this liquidation within 24 months after obtaining the shares of the listed company distributed in this liquidation.

In recent years, 360's performance has been poor. From 2022 to 2023, the company's operating income will be 9.521 billion yuan and 9.055 billion yuan respectively, and the net profit attributable to the parent company will be -2.204 billion yuan and -492 million yuan respectively. 360 days ago released a performance forecast, the company's net profit attributable to the parent in the first half of 2024 is expected to be -350 million yuan to -240 million yuan.

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