Chinese media outlet Jiemian reported on Wednesday that Tencent would officially announce the merger of Sogou this week. Due to the merger, Tencent Kandian will absorb most of the business and employees of Sogou. Recruitment is currently suspended. Tencent responded that the recruitment of Tencent Kandian and the merger with the Sogou team are proceeding as planned.
A number of middle-level employees from Sogou told Jiemian that, after the announcement concerning the merger of the two parties, most of the businesses and products in Sogou will be integrated into Tencent Kandian. The search and input method service of Sogou will be operated under Sogou. The docking work between the two parties has been going on for several months. The personnel adjustment brought about by the integration of Sogou will be completed before the Spring Festival thia year at the earliest.
At present, Tencent Kandian already has a large-scale search center with a team of nearly 400 people, covering major businesses such as general search capabilities, algorithms, recommendations, and commercialization. Several directors and team leaders from Tencent confirmed to Jiemian that, in mid-September, many internal centers had received a demand to reduce costs and increase their efficiency. Measures included strict controls of budgets, suspension of recruitment and the optimization of some staff responsibilities.
Tencent and Sogou signed a privatization agreement last September to take private Sogou’s operations, offering the company a deal worth 3.5 billion dollars. According to the deal, Sogou will become a wholly-owned subsidiary of Tencent after the transaction is completed and will cease trading on the NYSE. This reshuffling was originally scheduled to wrap up in the fourth quarter of 2020 but was delayed due to a lack of regulatory approval.
At the beginning of July this year, the State Administration of Market Supervision imposed a penalty of 500,000 yuan on Tencent for failing to declare its acquisition of 36.5% equity in Sogou in 2013. In mid-July, the market regulator disclosed that Tencent‘s acquisition of shares in Sogou had been unconditionally approved.
After incorporating the team of Sogou, Tencent Kandian will be host to more than 4000 employess, making it the company’s second-largest business line within its Platform and Content Group besides the company’s Online Video Business Unit.