- Baidu, Inc (NASDAQ: NASDAQ:BIDU) is exploring selling its controlling stake in iQIYI, Inc (NASDAQ: IQ) at a potential valuation of ~$7 billion, Reuters reports.
- Baidu, which owns 53% of iQIYI and holds over 90% of its shareholder voting rights, looks to sell all its holdings in China's Netflix, Inc (NASDAQ: NASDAQ:NFLX) counterpart.
- Baidu's targeted valuation of $7 billion represents a price of ~$8.13 per share, implying a 74% premium on its June 14 close of $4.67.
- The sudden divestment plan comes after Baidu deemed iQIYI a non-core asset.
- Baidu seeks to sharpen its focus on developing its capital-intensive artificial intelligence and autonomous driving units.
- The stake sale plan worth ~$50 billion by market value comes amid a domestic regulatory crackdown since late 2020 on firms from technology, private education, and other sectors, which battered their shares and forced some to scale back expansion in non-core areas. Baidu and iQIYI reported lackluster results in Q1.
- The iQIYI stake attracted interest from multiple financial sponsors and state-owned companies, including PAG and China Mobile.
- Baidu has reportedly engaged Bank of America (NYSE:BAC) to work on the potential sale.
- iQIYI called this report "pure market rumor" in an emailed statement to Reuters.
- Price Action: IQ shares traded lower by 4.28% at $4.47 in the premarket on the last check Wednesday.
- Photo via Wikimedia Commons
Read at Benzinga