Tencent, which beneficially owns about 39.2% of the total issued and outstanding shares of Sogou, has offered $9 per share in cash, a premium of 56.5% to the last close of Sogou's U.S.-listed stock.
Sogou's shares climbed to $8.39 in early morning trade.
The company was founded in 2005 by Sohu.com Inc and generates revenue mainly through search advertising services. Its Chinese rivals include Baidu Inc and Alibaba's UCWeb.
Sogou made its debut on
the U.S. market in November 2017 and raised $585 million at $13 per share.(https://reut.rs/3f5J1GW)
Tencent intends to finance the transaction with cash on hand and has won the backing of Sohu CEO Charles Zhang, who owns about 6.4% of Sogou, the Chinese tech giant said in a letter addressed to the target's board.
A special committee of the board, composed solely of independent directors, will consider the proposal, Sogou said.
(Reporting by Ayanti Bera in Bengaluru; Editing by Shinjini Ganguli and Sriraj Kalluvila)