BEIJING (dpa-AFX) - Chinese Internet giant Baidu, Inc. (BIDU) has Monday signed a memorandum of understanding with NetDragon Websoft, Inc. as part of a proposal to acquire 100 percent of mobile app subsidiary 91 Wireless Websoft Ltd. for a total consideration of $1.90 billion or about HK$14.74 billion.
However, NetDragon will receive only $1.09 billion or about HK$8.46 billion from the proposed sale for its indirect equity interest of about 57.41 percent in 91 Wireless. NetDragon and Baidu have until August 14 to further negotiate and agree on a definitive agreement.
Baidu will acquire the remaining minority equity interest in 91 Wireless from other shareholders based on similar terms and conditions as those offered to NetDragon. However, NetDragon is restricted from approaching or discussing with any third party shareholders of 91 Wireless before the definitive agreement is reached.
Started in 2007, 91 Wireless mainly engages in the development and operation of community websites, 91 Launcher, 91 Panda Reader and other popular products as well as two leading smartphone apps distribution platform for smartphone users in China, namely 91 Assistant and HiMarket.
91 Wireless is the leader in 3rd party apps distribution platform in China by both active users and accumulated downloads, according to iResearch 2011-2012 report.
91 Wireless was on course to be spun-off from NetDragon through an initial public offering and was set to obtain the listing approval on the secondary Growth Enterprise Market or GEM, on the Hong Kong Stock Exchange. If the proposed deal with Baidu takes place, the listing plan will be dropped by NetDragon.
The memorandum of understanding also provides for a break-up fee of US$50 million or about HK$387.90 million payable by Baidu to NetDragon within three days after the date of the memorandum of understanding.
BIDU closed Monday's regular trading session at $101.59, up $4.74 or 4.89% on a volume of 5.72 million shares.
Copyright RTT News/dpa-AFX