Qihoo 360 Technology Co. rose to the highest since November, leading a rally in U.S.-traded Chinese stocks as an $8.2 billion buyout offer from its top executive fueled speculation that other deals are in the works.
Qihoo, which develops security software and owns China’s second-largest search engine, jumped 6.2 percent to $70.15 in New York Wednesday. Trading volume of 13.5 million shares was more than 4 times the daily average of the past three months. The stock contributed the most to a 1.6 percent gain in the Bloomberg China-US Index as Xunlei Ltd. and SouFun Holdings Ltd., which some analysts have identified as potential buyout targets, each rallied at least 9 percent.
An investor group led by Hongyi Zhou, Qihoo’s chairman and chief executive officer, proposed to pay $77 per American depositary receipt to buy all the outstanding stock, a 17 percent premium over Tuesday’s closing price. The offer was the biggest ever for a U.S.-traded Chinese Internet company, according to data compiled by Bloomberg. The shares are still trading 42 percent below the record high reached in March 2014.
“Qihoo has dropped dramatically, and it’s a good time to take it private,” Gabriel Wallach, founder of North Grove Capital LLC in Boston which invests in Chinese stocks, said by phone Wednesday. “The sector in general has been out of favor in the U.S. The interest in these laggards is price-related instead of strategic, besides the potential of re-listing in China with a higher multiple.”
SouFun, a real-estate information website, jumped 9.1 percent to $9.75. Xunlei Ltd., which provides video download services, surged 11 percent to $13.48. A record 16 companies have received bids to take them private this quarter, stoking speculation more firms will join the queue.
The investor group bidding for Qihoo also includes Citic Securities Co., Golden Brick Capital, China Renaissance Holdings and Sequoia Capital, Beijing-based Qihoo said in a statement.
Qihoo and SouFun have the best chances of going private, 86Research Ltd., which tracks U.S.-traded Chinese companies, said in a note dated June 12. Analysts at China International Capital Corp. also included SouFun and Xunlei on its list of likely names that will seek to go private in a note last week.
E-Commerce China Dangdang, Inc., a web-based retailer, jumped 13 percent to a six-month high of $11.48. Jumei International Holding Ltd., which sells beauty products online, climbed 9.5 percent to $24.97.