Friday, March 24, 2006


The rumor that Tom online was looking to step into Sina seems to have some basis. Hong Kong newspaper ??? had an article saying Tom is in talks to buy Shand's 20% stake in SINA, citing unidentified person.

I guess SINA stock has run up in past couple weeks mainly due to this takeover speculation. It is hard to say how likely the takeover will happen, but in the past years, we have heard plenty of this kind rumor, it first started with Yahoo to buy SINA, then Shanda, and now it is Tom Online.

If Tom Online is serious, then I guess Shanda could make some money on their 20% stake. Chen Tianqiao may have realized that speculating on taking over SINA was a huge strategic mistake, he may find that it has wasted him one year's time and locked up his capital. I think it is good for him to unload this stake at a premium to any buyer who wants it. If he can make 25% on his 200+ mil USD bet, not bad. On the other hand, if he does not sell out, he may have to sell out on open market in one or two years to retire his convertible debt(most likely debt holders will exercise put option).

From a fundamental perspective, I think current stock price($27.5) offers a good point to get out, if you are not an expert in takeover/merger plays. I maintain my previous year-end target of 25$.


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