China’s Qihoo will reportedly shell out $1.4b for Sogou to up search presence and rivalry with Baidu

Qihoo 360, a Chinese tech company which launched a search engine of its own last year, has reportedly reached a deal to fully acquire Sohu’s Sogou search engine for an estimated $1.4 billion, according to DoNews which cites a source familiar with the matter.

The deal, if true, would combine the second- and third-largest search engines in China, threatening to chip away more of market leader Baidu’s market share — which was once at 80 percent after Google left China in 2010 but has steadily declined since then.

The report says that the two companies will make the announcement soon. Qihoo CEO Zhou Hongyi was said to have headed to the US recently to hold discussions with Sohu CFO Carol Yu, and Sogou CEO Wang Xiaochuan wasn’t involved in the talks.

After the deal, Sohu CEO Charles Zhang will reportedly be the co-chairman of Qihoo, while Zhou Hongyi will remain as CEO.

Following the speculation, Wang spoke up on Sina Weibo to dismiss the report, saying that it has been the fourth time he has had to deny such rumors. A Qihoo spokesperson contacted by TNW declined to comment, saying that the company doesn’t respond to market speculation.

Rumors have been flying since months ago that Sogou was being courted by large tech companies including Baidu, Tencent and Qihoo. It, however, seems that Qihoo would be the most keen to acquire Sogou, as it seeks to consolidate the search engine market and become a formidable rival to Chinese search giant Baidu.

Even now Qihoo, which launched its search engine in August last year and quickly jumped into second place, is posing a challenge to Baidu. A recent report showed that Qihoo’s search engine occupies 15.26 percent of traffic share in terms of page-views, tipping Baidu off its pedestal as the latter has fallen below 70 percent — with 69.37 percent of the share. Sogou takes third place with 8.83 percent of the traffic share — and it is clear why Qihoo would want to take control of it.

There has been a flurry of acquisitions in the Chinese tech scene this year, notably: Alibaba invested $586 million to grab 18 percent of SINA’s microblogging service Weibo and bought 28 percent of AutoNavi for $294 million, while Baidu bought PPS Video for $370 million.

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