Kingsoft Corp. (3888), the Chinese software maker, rose to the highest level in almost three years in Hong Kong trading after saying it’s in preliminary talks about a “possible disposal.”
The shares gained as much as 3.5 percent to HK$6.81, headed for the highest closing price since Jan. 19, 2010, and traded at HK$6.73 as of 2:20 p.m. Kingsoft is in “preliminary discussions with independent third parties relating to a possible disposal,” the company said in a stock exchange statement today. No definitive agreement has been reached, it said.
Tencent Holdings Ltd. (700), China’s biggest Internet company, agreed in July 2011 to buy a 15.7 percent stake in Kingsoft for HK$892 million ($115 million) to expand in computer-security services. Baidu Inc. (BIDU:US), owner of China’s most popular search engine, may want to invest in Kingsoft to boost competitiveness against companies including Qihoo 360 Technology Co. (QIHU:US), said Eric Qiu, an analyst at Guosen Securities Co. in Hong Kong.
“Investing in Kingsoft would bring benefits to both companies,” Qiu said. “Baidu has been quite weak in terms of antivirus software and Web browsers. Kingsoft has always had expertise in these areas and a good user base.”
Kaiser Kuo, a spokesman for Beijing-based Kingsoft, declined to comment. Baidu said in November the $1.5 billion raised in its debut bond issue will serve as a “war chest” for strategic uses including possible acquisitions.
Chen Feng, Kingsoft’s board secretary, also declined to comment.
Kingsoft rose 8.4 percent in Hong Kong yesterday and is up 24 percent this year, compared with a 3.2 percent gain in the city’s benchmark Hang Seng Index. (HSI) The company offers products including office software, Internet security and online games.
China, the world’s largest Internet market by users, is promoting information safety as it encourages more consumers to shop online and expands telecommunication networks to cover remote villages. The government plans to increase e-commerce transactions to more than 18 trillion yuan ($2.9 trillion) by 2015.
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