Case Study Of Qihoo 360 Backdoor Listing

Early 21 st century,due to the immature development of China's capital market,the listing of companies was received many restrictions.In order to obtain the funds needed for development,overseas listing became a popular choice.We call these Chinese enterprises listed overseas as Chinese concept stocks.However,the progress of Chinese capital market is not smooth sailing.Many Chinese capital companies have been in a situation of low stock price and poor stock liquidity for a long time.It is difficult to obtain the expected financing to promote the further development of the company.At the same time,China's capital market environment has been gradually optimized,and the valuation level of Listed Companies in A-share market has increased and the volume of transactions is high.Therefore,in recent years,more and more Chinese equity firms choose to start the privatization process and return to the domestic capital market to raise funds.Due to the harsh conditions of IPO listing and the long queuing time,the returning companies prefer the special way of backdoor listing.Therefore,backdoor listing has become a hot pursuit of the capital market,triggering a wave of backdoor listing of Zhongguo shares.Qihoo 360,listed in the United States,announced its privatization delisting in June 2015 and its return to A-share market on November 2,2017.Finally,Qihoo 360 formally reorganized its listing on February 28,2018 and successfully returned to A-share market.Qihoo 360 is the largest Internet security service company in China,and also the largest privatized company in China's returned stock market.Therefore,Qihoo 360's successful return to A shares has a certain reference significance for other stock companies.This paper uses case study method to analyze the listing of Qihoo 360 backdoor Jiangnan Jiajie.The first and second parts review and sort out the research results and related theories of backdoor listing.The third part is the introduction of Qihoo 360 backdoor listing.It introduces the background of Qihoo 360 returning to A-share market,the basic situation and development and operation of Qihoo 360 and Jiangnan Jiajie,as well as the backdoor listing scheme of Qihoo 360.In terms of shell resource selection,this paper screens seven shell companies suitable for Qihoo 360 from market value,equity scale,cleanliness of shell companies and shell company's operating conditions,and concludes that Jiangnan Jiajie is indeed a high-quality shell resource.As for the backdoor scheme,Qihoo 360's assets are valued at 5.42 billion yuan according to the income method and Jiangnan Jiajie's assets are valued at 1.87 billion yuan according to the asset base method.The backdoor scheme includes three parts: asset stripping,sale of major assets and directional additional purchase of assets.The innovation of the scheme is that assets are replaced and resold to major shareholders.The fourth part of the article is the analysis of the motivation,risk and effect of Qihoo 360 backdoor listing.As for the motivation,the article considers that 360's product nature is related to the national network security,and 360's business development encounters bottlenecks.In addition,360 needs to go public as soon as possible in order to complete privatization with huge debts,while 360's listing through IPO is difficult and time-consuming,and backdoor listing is an ideal choice.Then it introduces the risks before backdoor borrowing,during backdoor borrowing and after backdoor restructuring.Potential problems: The risks before backing include the risks of shell resources,insider information leakage and insider trading.The risks in backing process include the risks of cancellation of transactions,failure of approval of backing listing and so on.The potential problems after backing restructuring mainly include the implementation risk of performance commitment compensation and the legacy of privatization.Through the analysis,the paper considers that Qihoo 360 backdoor listing is very successful,which not only makes the company's market value greatly increased,management control rights improved,but also makes the investors who participate in Qihoo 360's return obtain high returns.The fifth part of the article is case enlightenment and suggestions.On the basis of in-depth analysis of the case,we conclude that Qihoo 360's successful backdoor listing experience includes: 1.sufficient preparation before backdoor listing;2.Qihoo 360 backdoor listing chooses appropriate shell resources and trading methods;3.backdoor listing meets the listing requirements and transaction pricing is relatively fair;4.intermediaries play an active role in backdoor listing.Finally,on this basis,the paper puts forward some suggestions for the stock market in preparation for return.