
Background
On July 27, 2020, there was an preliminary non-binding proposal for Tencent to acquire all of the outstanding ordinary shares, including ordinary shares represented American depositary shares (“ADSs”), of Sogou that are not already owned by Tencent or its affiliates for US$9.00 in cash per ordinary share or ADS. Tencent currently beneficially owns approximately 39.2% of the total issued and outstanding Shares and 52.3% of the total voting power of Sogou. After the announcement, a spread still exist between the market price and proposed offer price.
Spread = US$ 9 – Market price of Sogou Inc. (SOGO)
How the spread change after the announcement

After the announcement , the spread was between US$0.48 to US$0.58.

The potential return (Spread / Market price of Sogou Inc. (SOGO) was between 5.8% to 6.8%. This is must higher than SINA Corporation (SINA)’s $41 Buyout Proposal which was between 1% to 3.3%.
The only condition to capture the potential return
The potential return can only be realized if the buyout proposal turn into a definitive agreement which mean the offer is legally binding.
Risk and Consideration
- The potential return of the spread is subject to different fees or tax (Transaction fee, Handling fee) which affect the overall return.
- There is no assurance that any definitive agreement will be made.
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