Sina To Be Taken Private In $2.6B Bid; Shares Gain 6%

Shares of Sina Corp. soared 5.9% on Monday after the company announced that it will be taken private in a deal that values the online media conglomerate at $2.59 billion. The announcement comes as the company reported better-than-expected 2Q results.

SINA (SINA) entered a definitive agreement under which it will be taken private by a group of companies affiliated with its CEO, Charles Chao. As part of the deal, Sina will receive $43.30 for each outstanding share. The transaction is anticipated to be completed during 1Q of 2021. Shares closed at $42.55 on Monday.

Sina reported 2Q revenues of $507.7 million that surpassed analysts’ expectations of $482.9 million. The China-based online media conglomerate reported non-GAAP EPS of $0.54, which beat the Street consensus of $0.43.

However, the company’s top and bottom-line results plunged on a year-over-year basis mainly due to a 10% year-over-year decline in advertising revenues. Sina stated that soft advertising performance was “primarily due to continued weak advertising demand from certain industries in the aftermath of the domestic coronavirus outbreak, as well as negative currency translation impact.” (See SINA stock analysis on TipRanks).

On July 7, Citigroup analyst Alicia Yap had reiterated a Buy rating and price target of $57 (34% upside potential) after Sina received the first proposal to go private from New Wave MMXV Limited on July 6. New Wave MMXV is a British Virgin Islands company controlled by Chao. In a note to investors, Yap said that New Wave could have offered more for Sina than its $41 per share proposal.

Overall, the Street has a cautiously optimistic outlook on the stock, with a Moderate Buy analyst consensus. With shares up 6.6% year-to-date, the average price target of $57 implies further upside potential of 34% to current levels.