China’s dominant search engine, Baidu (BIDU), kicked off the new year by announcing the cancellation of the $3.60 billion Joyy (YY) deal.
Baidu’s decision was first revealed in its Monday filing with the Hong Kong Stock Exchange (HKEX). It attributed the termination to a failure to obtain the necessary regulatory approvals for the merger.
Chinese authorities began implementing stricter controls on business acquisitions in late 2020. They placed particular focus on Big Tech, citing their power to influence various facets of society.
Nevertheless, Beijing showed signs of easing the crackdowns in 2023 amid a deteriorating economic outlook. Despite the relaxed requirements, Baidu failed to make enough concessions to satisfy China’s anti-monopoly guidelines before the December 31 deadline.
CEO Robin Li touted Baidu’s plan to obtain Joyy in November 2020 to expand its revenue sources. Li expressed confidence in closing the deal in the first half of 2021 and accelerating the growth of both businesses by 2022.
Baidu closed 2023 with a two-day winning streak of 3.00% and 1.08%, respectively, for a year-end price per share of $119.09. Its stock price barely moved from $119.13 in last year’s opening market session.
Analysts anticipate a sharp drop in the company’s share price once the stock market opens on January 02 due to the failed merger.
Joyy Seeks Legal Advice After Baidu Deal Collapses
Joyy said it received Baidu’s notice of the effective cancellation of the transaction on January 01. As a result, the owner of the popular live-streaming platform YY Live has consulted legal experts for a response.
The business owns several platforms with a combined 277 million active monthly users (AMU) globally. Overall, it posted an annual growth rate in stock price of 13.00%, from $35.13 per share to $39.70 apiece.
However, Joyy lost momentum in the latter half of 2023, posting a third-quarter net revenue of $567.1 million. Investors were disappointed at the -3.34% drop compared to the $586.70 net revenue in the second quarter.
More importantly, its live-streaming revenue shed -9.00% to $495.80 million.
