Sina Corp. (SINA) sank to the lowest level since June on concern the initial public offering of its Twitter-like unit will shrink its valuation.
Shares of Shanghai-based Sina fell 4.9 percent to $53.59 today in New York, extending its three-day decline to 13 percent. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. dropped 0.8 percent to 97.68.
Weibo plans to offer 20 million shares for $17 to $19 apiece in an offering that would value the company at as much as $3.9 billion, an April 4 regulatory filing shows. Alibaba Group Holding Ltd., which agreed in 2013 to buy an 18 percent stake in Weibo, will exercise an option to raise that stake to 32 percent, according to the filing. Alibaba, China’s biggest e-commerce company, will purchase shares at a 15 percent discount to Weibo’s IPO price, it said last month.
“The reduction of the holding would reduce part of Sina’s valuation,” Echo He, senior equity analyst at New York-based Maxim Group LLC, said in a telephone interview. “The increase of Alibaba’s holding, at least in the near term, is hurting Weibo’s IPO. Alibaba is going to get a price at 15 percent discount, so that kind of dilution would cause some investors to price conservatively on Weibo’s IPO.”
Weibo plans to use some of the proceeds from its offering to repay loans to Sina, which currently has a 78 percent stake in the microblogging outlet. Sina will have 80 percent of the voting power after the sale, while Alibaba will have 15 percent. Alibaba is also preparing to go public in the U.S., the company has said.
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