Huge takeover rocks China’s Internet

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Sohu.com has announced a takeover of rival company, ChinaRen.com, to create China’s largest Internet portal. This is the biggest takeover ever in China’s Internet industry. Worth US $30M, the deal could motivate rivals Sina.com and Netease.com to seek alliances of their own.

The merger with ChinaRen will boost Sohu’s users from 4.1 million to 7.8 million, and daily hits from 25 million to 44 million.

“We are offering 4.4 million of our shares for all outstanding shares of ChinaRen,’’ said chief finance officer Tom Gurnee.

Sohu president Charles Zhang said the firm was still on target to achieve profit in 2003 despite the merger, which would increase its cash burn rate.

Sohu’s extensive search engine and directory make it a popular site, and that addition of www.chinaren.com, should make it more so, attracting young university graduates to its alumni chatrooms.

Zhang said Sohu had no plans to cut jobs following the merger with ChinaRen, which employs more than 200 people. “There will be some overlap,” he said,“but I believe Sohu can absorb ChinaRens’ team.’’

Zhang said Sohu was likely to buy more Chinese firms in the future to gain a toehold in a market which is doubling every six months and has now around 17 million users.

Poor telecoms links and a lack of credit cards in the mainland have left Chinese Internet firms in deep deficit, however, and the industry may still have trouble ahead.

Sohu.com

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