Tencent Holdings Limited (SEHK:700) made a preliminary non-binding proposal to acquire remaining 61% stake in Sogou Inc. (NYSE:SOGO) from Sohu.com Limited (NasdaqGS:SOHU), Charles Zhang and other shareholders for $2.1 billion on July 27, 2020. Tencent Holdings Limited (SEHK:700) entered into a definitive agreement to acquire remaining 61% stake in Sogou Inc. (NYSE:SOGO) from Sohu.com Limited (NasdaqGS:SOHU), Charles Zhang and other shareholders on September 29, 2020. Tencent Holdings Limited will pay $9 in cash per Class A ordinary shares including Class A Ordinary Shares represented by American Depository Shares each representing one Class A ordinary share and will pay $9 in cash per Class B ordinary share. Prior to the transaction, Charles Zhang owns 6.4% stake and Sohu.com Limited holds 33.8% stake in Sogou Inc. After the transaction, Sohu.com will hold no stake in Sogou Inc. Tencent Holdings Limited will finance the acquisition with cash on hand. It is anticipated that no debt financing is required to consummate the transaction. After the transaction, Sogou Inc. will become a privately held, indirect wholly owned subsidiary of Tencent Holdings Limited. Sogou's American Depositary Shares would be delisted from the New York Stock Exchange. The agreement can be terminated under certain circumstances. Sogou Inc. will pay to Tencent Holdings an amount equal to $30 million while Tencent Holdings will pay a termination fee of $60 million to Sogou Inc.

The transaction is subject to approval of Board of Directors and shareholders of Sogou Inc. (as applicable). A special committee of the Sogou Board, composed solely of independent directors will consider the proposal letter containing the non-binding proposal. On July 31, 2020, it was announced that Bin Gao, Jinmei He and Janice Lee, each an independent director will be part of the special committee. Tencent expects that the transaction may be effected via a long-form merger or short-form merger, as applicable, at the proposed purchase price. Charles Zhang has agreed to vote all the shares beneficially owned by him in favor of the transaction. As of September 29, 2020, Sogou's Board of Directors acting upon the unanimous recommendation of a committee of independent and disinterested Directors established by the Board, approved the merger agreement and the merger. As on December 1, 2020, Sohu.com, Sohu Search, and parent executed an amendment No. 1 to share purchase agreement, to extend the termination date under the agreement from March 29, 2021 to July 31, 2021. On July 13, 2021, China's antitrust regulator unconditionally approved the transaction. The merger is expected to close in the fourth quarter of 2020. As on December 1, 2020, Sohu.com, Sohu Search, and parent executed an amendment No. 2 to share purchase agreement, to extend the termination date under the agreement from July 31, 2021 to December 31, 2021. As of August 9, 2021, transaction is expected to close during the second half of 2021.

Goldman Sachs (Asia) L.L.C. acted as the financial advisor to Tencent Holdings Limited. Miranda So, Yunpeng Fan, Pritesh P. Shah, Alon Gurfinkel and Gregory D. Hughes of Davis Polk & Wardwell LLP acted as legal advisors to Tencent Holdings Limited. Tim Bancroft of Goulston & Storrs acted as legal advisor to Sohu.com (Search) Limited while Timothy Bancroft of Goulston & Storrs acted as legal advisor to Special Committee of the Board of Directors of Sogou Inc. Duff & Phelps, LLC acted as financial advisor and fairness opinion provider for the special committee of Sogou Inc. As compensation for Duff & Phelps's services in connection with the rendering of its opinion to the Special Committee, the Company agreed to pay Duff & Phelps a fee of $850,000, consisting of a nonrefundable retainer of $425,000 payable upon engagement, and $425,000 payable upon Duff & Phelps rendering the opinion at the request of the Special Committee. China Renaissance Securities (Hong Kong) Limited acted as financial advisor, Han Kun Law Offices acted as legal counsel and PricewaterhouseCoopers Consultants (Shenzhen) Limited Beijing Branch acted as tax advisor to Sohu. Haiwen & Partners is serving as legal counsel to Tencent. Conyers Dill & Pearman acted as legal advisor to Sogou. Walkers (Hong Kong) acted as legal advisor to Tencent. Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to Goldman Sachs (Asia) LLC in the transaction.

Tencent Holdings Limited (SEHK:700) completed the acquisition of remaining 61% stake in Sogou Inc. (NYSE:SOGO) from Sohu.com Limited (NasdaqGS:SOHU), Charles Zhang and other shareholders on September 23, 2021. Pursuant to the Merger Agreement, all the Class A ordinary shares, par value $0.001 per share, of the Company (“Class A Ordinary Shares”), including Class A Ordinary Shares represented by American depositary shares (“ADSs”), each ADS representing one Class A Ordinary Share, that were issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”), other than the Excluded Shares (as defined in the Merger Agreement) and ADSs representing the Excluded Shares, were cancelled, and ceased to exist, in exchange for the right of the holders thereof to receive $9.00 in cash per Class A Ordinary Share (the “Per Share Merger Consideration”) or $9.00 in cash per ADS (the “Per ADS Merger Consideration”), as applicable. Skadden, Arps, Slate, Meagher & Flom LLP acted as a legal advisor to Sogou Inc.