SINA Gears Up for Weibo Distribution

Print Email

SINA Corp. (NASDAQ: SINA) watched its shares slide on Wednesday following the announcement that the company will be distributing part of its stake in its majority-owned subsidiary Weibo Corp.  (NASDAQ: WB). In a recent release, the company announced that its board of directors has authorized and approved the distribution of shares of Weibo to its shareholders on a pro rata basis.

According to the terms of the deal, SINA will distribute one Weibo Class A ordinary share to the holder of each 10 SINA ordinary shares. Holders of SINA ordinary shares that are settled through DTC will receive Class A ordinary shares represented by Weibo American depositary shares.

The Weibo share distribution is expected to take place and be payable around mid-October, to the shareholders of record as of the close of business on September 12.

After the distribution of the Weibo shares, SINA’s total equity stake in Weibo will fall about 3% to roughly 51% (or 75% by voting power) from 54% (or 78% by voting power).

For some background, SINA is a leading online media company serving China and the global Chinese communities. Its digital media network of SINA.com (portal), SINA.cn (mobile portal), SINA Mobile Apps and Weibo.com (social media) enables internet users to access professional media and user generated content in multimedia formats from personal computers and mobile devices and share their interests with friends and acquaintances. As for Weibo, this social media site provides a Twitter-like service to its users in China.

Excluding the move on Wednesday, both companies have outperformed the broad markets, with SINA up 53% and Weibo up nearly 150% year to date. Over the past 52 weeks, the stocks are up 95% and 290%, respectively.

SINA traded down 3.2% at $73.04 Wednesday morning, with a consensus analyst price target of $78.08 and a 52-week trading range of $36.18 to $78.32.

Weibo was last seen down 2.6% at $46.29, in a 52-week range of $12.09 to $52.29. The consensus price target is $42.75 and