Qihoo in talks to buy Sohu.com's search unit
Qihoo 360 Technology, a Beijing-based software developer, is in initial talks to buy Sohu.com's Sogou unit to help it compete with Baidu for internet searches on the mainland.
Combining Qihoo and Sogou would unite the mainland's second- and third-largest search engines in competition with Baidu, which controls more than 80 per cent of internet queries there.
If you want to be relevant, to challenge the dominant player, Baidu, you need more market share
Sohu said in May it was seeking a strategic investment in Sogou as it focused on online media and entertainment, especially video on mobile devices.
Any deal would probably be financed with cash and stock, Qihoo chief financial officer Alex Xu said yesterday, declining to give the size of such a deal. Sogou is valued at about US$1 billion to US$1.4 billion, said Lucy Zhang, a Beijing-based analyst at internet consulting group iResearch.
"It makes strategic sense for Qihoo to pursue this deal," said Elinor Leung, head of Asia telecommunications and internet research at CLSA in Hong Kong. She said if Qihoo succeeded in boosting its market share with the Sogou purchase, "they can scale with it".
Jiang Xin, a spokeswoman for Sohu, declined to comment.