Renren Receives Buyout Offer from CEO, COO -Update

By Angela Chen and Carlos Tejada 

A Chinese company once touted as the Facebook of China has received a management buyout offer valuing the social-networking firm at about $1.4 billion.

Beijing-based Renren Inc. was one of a number of Chinese social-media companies that sprang up a decade ago as increasingly affluent China turned to the Internet. But it was eclipsed by rivals such as Weibo Corp. and the social-networking services owned by Tencent Holdings Ltd., and has more recently invested in online video and mobile services like games.

Chairman and Chief Executive Joseph Chen and Chief Operating Officer James Jian Liu proposed to acquire all outstanding shares they don't already own for $4.20 per American depositary share, or $1.40 per ordinary share. The proposal is nonbinding, the company said.

Together, Mr. Chen and Mr. Liu own about 32% of the company and have 49% voting power, the company said. They plan to fund the proposed transaction with a mix of debt and equity capital. The board will form a committee to consider the proposal.

Based on 1.02 billion diluted shares as of March 31, the offer values Renren at about $1.4 billion.

Renren--which means "everybody" in Chinese--offered a social-networking service similar to Facebook Inc. and was helped when China blocked the U.S. service on the mainland. Renren raised more than $740 million in its New York initial public offering four years ago that saw its ADSes shoot well above their $14 offering price.

But its main service has struggled to achieve profitability. In the first quarter Renren reported a loss of $27.6 million. Renren in recent years has sold off noncore businesses and looked to diversify into area like mobile and games.

Other Chinese Internet companies have turned their focus to mobile to capture Chinese users who increasingly tap the Internet through smartphones and tablets.

Mr. Chen, Renren's founder, is known in China for his funding of startups.

One recent investment was in FiscalNote, a startup that tries to forecast U.S. legislation.

Write to Angela Chen at [e-mail]

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