BEIJING, Sept. 25, 2017 /PRNewswire/ -- SINA
Corporation (the "Company" or "SINA") (NASDAQ: SINA), a leading
online media company serving China
and the global Chinese communities, today announced that it has
filed definitive proxy materials with the U.S. Securities and
Exchange Commission ("SEC") in connection with the Company's
upcoming 2017 Annual General Meeting of Shareholders (the "Annual
General Meeting") to be held on November 3,
2017. SINA shareholders of record at the close of business
on September 20, 2017 are entitled to
attend and vote at the Annual General Meeting. The proxy statement
and other important information related to the Annual General
Meeting can be found on the Company's website at
http://corp.sina.com.cn/eng/AGM/.
The SINA Board of Directors unanimously recommends that
shareholders vote "FOR" Yichen
Zhang and vote "AGAINST" each of Aristeia's nominees
today by signing and dating the enclosed WHITE proxy card.
In connection with the filing of the proxy statement, the SINA
Board mailed the following letter to shareholders:
VOTE THE WHITE PROXY CARD TODAY TO SUPPORT THE
SINA BOARD'S RECOMMENDATIONS
September 25, 2017
Dear Fellow Shareholders,
At the SINA 2017 Annual General Meeting to be held on
November 3, 2017, you will be asked
to elect the director(s) whom you believe are most qualified to
oversee the execution of the Company's strategy and serve in the
best interests of ALL SINA shareholders. Your Board of Directors
unanimously recommends that you vote "FOR" the re-election of
Yichen Zhang. This decision, we
believe, will help protect the immediate future of the Company and
the value of your investment in SINA.
A New York City hedge fund,
Aristeia Capital, L.L.C., that owns approximately 3.5% of SINA's
shares has launched a costly and disruptive proxy contest to elect
two of its hand-picked nominees to your Board. We urge our
shareholders to discard any proxy materials sent to you by Aristeia
and to vote "AGAINST" the Aristeia nominees, Brett Krause and Thomas
Manning, on SINA's WHITE proxy card. We believe that
Aristeia's proposed plan will not create sustainable shareholder
value, but will instead consist of financial engineering maneuvers
that will introduce substantial risk to your company, including
certain proposals that are simply not feasible. We also note that
Messrs. Krause and Manning are collectively being paid up to
$160,000 in cash for their
participation in Aristeia's proxy fight. We believe such payment
clearly indicates that the Aristeia nominees will not function
independently of Aristeia and instead, if elected, would seek to
implement Aristeia's value-destructive agenda and could place in
jeopardy the significant increase in SINA's share price that has
recently occurred.
SINA'S ONGOING STRATEGY HAS DELIVERED RECORD
PERFORMANCE AND HIGHLY ATTRACTIVE RETURNS FOR
SHAREHOLDERS
SINA has built a strong digital media network in China, which includes SINA.com and SINA.cn (PC
and mobile portal), SINA Mobile Applications (SINA News App and
other vertical apps) and Weibo (the leading social media platform
in China). Online advertising has
been a main source of SINA's revenues since its inception, and we
are now adapting our core business to address headwinds facing PC
advertising by expanding and enhancing our mobile advertising
platform. Weibo is an integral component of this strategy, creating
significant revenue synergies through the sharing of data and IP to
drive user traffic and strengthen targeted advertising and content
specifically tailored for the SINA mobile portal and apps. Our work
is delivering results, and we believe our strategy will
successfully position our web portal business for the
long-term.
The SINA Board and management team have also overseen
significant stock price appreciation, established SINA's solid
balance sheet and proven its ability to help incubate and develop
new businesses and business models, such as Weibo. Weibo continues
to benefit from the resources provided by SINA across critical
areas including technology, talent, leadership and capital as it
builds on its position. The operating synergies between SINA and
Weibo directly contribute to Weibo's value generating ability as
part of the SINA portfolio, and we believe these efficiencies add
value that would not otherwise be created on a standalone
basis.
The success of our operating strategy is demonstrated by our
record high non-GAAP income from operations growth of 235%
year-over-year and net revenue growth of 47% year-over-year in the
second quarter of 2017. SINA's relative stock performance, which
has outperformed the NASDAQ Composite Index by approximately 28%
and 123% over the past one- and three-year periods,
respectively[1] , further reflects the success of our
operating strategy and investments.
SINA HAS A RECORD OF VALUE CREATION THROUGH
ROBUST CAPITAL RETURNS AND IS COMMITTED TO ENHANCING
SHAREHOLDER VALUE
SINA's record of growth and value creation has been overseen by
five highly qualified directors, four of whom are independent, with
a wealth of relevant experience in China's internet industry, professional online
media and social media businesses and finance and asset management
at publicly-traded companies, including leadership and operating
experience in China.
Importantly, our independent director, Mr. Zhang, who is subject
to re-election at the 2017 Annual General Meeting in accordance
with our articles, has direct leadership experience in many of
these key areas.
Additionally, Charles Chao, our
Chairman and CEO, beneficially owns approximately 12% of SINA's
outstanding ordinary shares, and is the largest shareholder of
SINA, ensuring the Board's and management's interests are fully
aligned with the interests of all shareholders. Mr. Chao purchased
these shares in 2015 at an above-market price when SINA's stock
price was under pressure for an extended period of time. He did so
in an effort to increase shareholders' confidence in SINA and align
management's interests with those of all shareholders. SINA's stock
price rose on the day after Mr. Chao's purchase was announced,
demonstrating shareholders' support of this initiative.
This alignment with shareholders is further demonstrated by the
Company's return of approximately $1.8
billion of capital to its shareholders since 2014, which is
the highest for China-based
internet and technology companies listed in the U.S. SINA is
executing on a prudent capital allocation plan that balances
significant shareholder returns, organic and acquisitive growth
investments and a strong and stable balance sheet.
Ongoing share repurchase plan
A portion of SINA's returns to shareholders has been through the
execution of a $500 million share
repurchase plan under which the Company has repurchased
$311 million of its shares. On
August 9, 2017, the Board approved an
extension of the $500 million share
repurchase plan until June 30, 2018,
which plan was originally announced in March
2016. We expect to fund the repurchases out of our existing
cash balance and execute repurchases at appropriate times.
Distribution of Weibo shares
Additional shareholder returns have been through the
distribution of approximately 14.2 million Weibo shares to SINA
shareholders in October 2016 and
July 2017, representing more than 12%
of SINA's total holdings in Weibo valued at approximately
$1.5 billion.[3] Following
the distribution of Weibo shares in July
2017, SINA's total equity stake in Weibo decreased from
approximately 49% (or approximately 74% by voting power) to
approximately 46% (or approximately 72% by voting power). Aristeia
has promoted a proposal to further distribute 33 million shares of
Weibo. This distribution would be taxable to U.S. shareholders, and
thus could prevent shareholders from fully participating in Weibo's
upside to the extent they need to sell such shares to satisfy tax
obligations.
Prudent capital allocation
The SINA Board and management team also regularly explore,
develop and invest in value-enhancing opportunities to increase
business scale, diversify business models and increase
competitiveness to generate sustained growth and return capital to
shareholders. The strength of SINA's balance sheet enables the
Company to be nimble when accretive and synergistic transaction
opportunities arise and to avoid costly and risky financing to fund
its growth needs.
This is especially important in the current environment when the
Chinese government is monitoring corporate leverage. We believe
SINA's balance sheet is aligned with the government's intentions
and taking on leverage would create undue risk for SINA and our
shareholders. As S&P highlighted in a September 21, 2017 ratings report on China, "Although [China's] credit growth had contributed to
strong real GDP growth and higher asset prices, we believe it has
also diminished financial stability to some extent. The recent
intensification of government efforts to rein in corporate leverage
could stabilize the trend of financial risk in the medium
term."[4]
ARISTEIA'S PROPOSALS ARE RISKY AND POTENTIALLY
VALUE DESTRUCTIVE
Aristeia has proposed a strategy to partially or fully
distribute assets in exchange for cash or to engage in a change of
control merger as a way to narrow SINA's trading discount to its
Net Asset Value ("NAV"). We have conducted comprehensive analysis
and concluded that these proposals would likely have no impact on
the Company's discount to NAV and would be highly risky and
potentially value destructive.
We note, and third-party financial analysts agree, that trading
discounts at holding companies are common as a result of multiple
factors, some of which are beyond the companies' control. A survey
of listed holding companies with listed subsidiaries operating in
the internet industry in China
shows implied holding company trading discounts to NAV ranging from
33% to 37% in the second quarter of 2017. Importantly, a research
report issued by a leading third-party financial institution
recently calculated the Company's trading discount to NAV to be
within the lower range of the aforementioned survey.
Our analysis further shows that to eliminate any discount to
NAV, all of the free cash flow generated by SINA's subsidiaries
would need to flow to the consolidated holding company level. Such
a strategy would eliminate reinvestment in the subsidiary
businesses, thereby destroying value over time as our subsidiaries
would no longer have capital to invest in continued growth. This
strategy is especially harmful for fast growing companies in a
highly competitive market, such as Weibo, which require significant
reinvestment to maintain a growth trajectory. In addition,
remittance of all of the free cash flow generated by SINA's
subsidiaries in China is contrary
to the current foreign exchange control policy and implementation
measures widely adopted in the People's
Republic of China ("PRC"), and thus is not feasible in the
foreseeable future.
SINA believes that a partial distribution would not be effective
in reducing any discount to NAV. In fact, contrary to what Aristeia
may allege, the announcement of SINA's distribution of Weibo shares
in July 2017 had a limited impact on
SINA's stock price at the time. The Company opportunistically
manages this discount by using its balance sheet to repurchase
shares and assist the marketplace in absorbing peaks in the NAV
discount.
Regarding the sale of SINA's stake in Weibo specifically, both
SINA and Weibo would incur substantial dis-synergies as a result of
contractual obligations to ensure continued shared services across
data, management and IP, as well as tax inefficiencies for SINA
shareholders.
Furthermore, in a change of control transaction for either SINA,
Weibo or SINA's other businesses, SINA would be subject to
applicable PRC laws and regulations that govern merger and
acquisition activities, which for the value-added telecommunication
industry and the media industry, are highly complex. For instance,
the PRC Ministry of Commerce requires acquisitions by foreign
investors of Chinese companies engaged in industries that are
crucial to national security, such as online media, to be
subject to security review before consummation of any such
acquisition.
In light of these facts, Aristeia's proposals clearly
demonstrate Aristeia's complete lack of understanding of our
business and factors affecting our industry, and as a result,
Aristeia's purported "available option" for SINA to explore a sale
of itself is not a viable option.
It is clear that the SINA Board and management team have
delivered industry leading performance, created significant and
certain value and expect additional upside from its organic growth
strategy and Weibo holdings. On the other hand, Aristeia, through
its financial engineering, is seeking to conduct a risky,
short-term interest driven and potentially long-term value
destructive process for SINA and our stake in Weibo.
A transaction for SINA or its stake in Weibo would be unlikely
to succeed in China. The time,
resources and capital invested to pursue a transaction with a high
likelihood of failure, rather than accretive and value creating
opportunities, is not in the best interests of SINA
shareholders.
PROTECT YOUR INVESTMENT – VOTE "FOR" OUR SINA
NOMINEE, YICHEN ZHANG
Aristeia and its two nominees lack the relevant skills,
experience and understanding of SINA, the China market and public companies operating in
the internet and media industries in China, as clearly demonstrated by Aristeia's
proposal calling for the sale of the Company or its stake in Weibo.
We believe it is inappropriate for Aristeia, an approximately
3.5% shareholder based in New York
City that has traded in and out of SINA's shares over the
last few years, to control nearly 30% of the Board – approximately
nine times more Board representation as compared to the number of
shares Aristeia owns.
After the Board evaluated the qualifications of each of
Aristeia's nominees, the Board determined that the Aristeia
nominees – a law school professor and a tech-startup investor –
would not bring additive skills or experience to the Board and
believes the Aristeia nominees would seek to implement a strategy
that would threaten the investment of all other SINA shareholders.
Moreover, Mr. Krause has no experience serving on the Board of a
public company and may have a potential conflict of interest as a
result of his personal involvement as a managing partner of
PurpleSky Capital, an angel investor in Inke (映客), a company that
is in direct competition with SINA. Mr. Manning already serves on
three public company boards, has commitments to five other
organizations and resides in Illinois,
USA, and is therefore unlikely to have the necessary time to
devote to SINA.
Given our focus on enhancing our long-term strategy, SINA will
not support risky tactics that provide an unlikely and modest
short-term benefit, but create substantial long-term risk. We do
not believe that is what you want us to do, or that you would be
well-served by it. We urge you to vote "AGAINST" each of
Aristeia's nominees on the enclosed WHITE proxy card and to discard
any proxy materials you may receive from Aristeia.
Instead, we trust that you want us to implement strategies and
programs that are calculated to sustain our long-term performance
without undue risk. If that is indeed what you desire, we
encourage you to vote "FOR" Yichen
Zhang today by signing and dating the WHITE proxy card
and returning it in the postage-paid envelope provided.
We thank you for your continued support.
Sincerely,
|
Charles
Chao
Chairman of the Board
and CEO
|
Ter Fung
Tsao
Independent
Director
|
Yan Wang
Independent
Director
|
|
|
|
|
|
Song-Yi
Zhang
Independent
Director
|
Yichen
Zhang
Independent
Director
|
|
Your Vote Is
Important, No Matter How Many or How Few Shares You
Own!
|
|
If you have questions
about how to vote your shares, please contact:
|
|
INNISFREE M&A
INCORPORATED
Shareholders may call toll-free (from the U.S. and Canada):
888-750-5834
International shareholders may call: +1-412-232-3651
Banks and brokers (call collect): 212-750-5833
|
|
Please visit
http://corp.sina.com.cn/eng/AGM/ for more
information.
|
About SINA
We are an online media company serving China and the global Chinese communities. Our
digital media network of SINA.com (portal), SINA.cn (mobile
portal), SINA Mobile Apps and Weibo.com (social media) enable
Internet users to access professional media and user generated
content in multi-media formats from the web and mobile devices and
share their interests to friends and acquaintances.
SINA.com offers distinct and targeted professional content on
each of its region-specific websites and a full range of
complementary offerings. SINA.cn and SINA Mobile Apps provide news
information, professional and entertainment content from SINA.com
customized for mobile users in WAP (mobile browser) and mobile
application format. Weibo is a leading social media platform for
people to create, distribute and discover Chinese-language content.
Based on an open platform architecture, Weibo allows users to
create and post feeds and attach multi-media content, as well as
access a wide range of organically and third-party developed
applications, such as online games.
Through these properties and other product lines, we offer an
array of online media and social media services to our users to
create a rich canvas for businesses and advertisers to effectively
connect and engage with their targeted audiences.
Safe Harbor Statement
This letter contains forward-looking statements that relate to,
among other things, SINA's expected performance and SINA's
strategic and operational plans. SINA may also make forward-looking
statements in the Company's periodic reports to the U.S. Securities
and Exchange Commission (the "SEC"), in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
third parties. Statements that are not historical facts, including
statements about the Company's beliefs and expectations, are
forward-looking statements. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "confidence," "estimates"
and similar statements. The information in this letter is provided
only as of the date hereof, and SINA assumes no obligation to
update the forward-looking statements in this letter or elsewhere,
except as required by law. Forward-looking statements involve
inherent risks and uncertainties. A number of important factors
could cause actual results to differ materially from those
contained in any forward-looking statement. Potential risks and
uncertainties include, but are not limited to, failure to meet
internal or external expectations of future performance given the
rapidly evolving markets; condition of the global financial and
credit market; the uncertain regulatory landscape in China; fluctuations in the Company's quarterly
operating results; the Company's reliance on online advertising
sales and value-added services for a majority of its revenues;
failure to successfully develop, introduce, drive adoption of or
monetize new features and products; failure to enter and develop
the small and medium enterprise market by the Company or through
cooperation with other parties; failure to successfully integrate
acquired businesses; risks associated with the Company's
investments, including equity pick-up and impairment; and failure
to compete successfully against new entrants and established
industry competitors. Further information regarding these and other
risks is included in SINA's annual report on Form 20-F for the year
ended December 31, 2016 and other
filings with the SEC.
Contact:
Investor Relations
SINA Corporation
Phone: 8610-5898 3336
Email: ir@staff.SINA.com.cn
Larry Miller / Scott Winter
Innisfree M&A Incorporated
Phone: 212-750-5833
Media
Ed Trissel / Nick Lamplough
Joele Frank, Wilkinson Brimmer
Katcher
Phone: 212-355-4449
_______________________________
[1]
Based on SINA's closing stock price on September 22, 2017. Source: Yahoo Finance.
[2] Based on SINA's closing stock price on September 22, 2017 and SINA's closing stock price
on April 16, 2014, the day prior to
Weibo's initial public offering. Source: Yahoo Finance.
[3] Value based on Weibo closing stock price as of
September 22, 2017. Source: Yahoo
Finance.
[4] Source: S&P Global Ratings. "Research Update:
People's Republic of China Ratings Lowered to 'A+/A-1'; Outlook
Stable." September 21, 2017.
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SOURCE SINA Corporation