Benefit Analysis of Tencent's Acquisition of Sogou Company

Abstract

With the popularization of the Internet, the importance of traditional Internet search engine business is becoming increasingly prominent. While the search engine market is still dominated by the old giant companies (e.g., Baidu, 360) occupying most of the market share. Tencent's acquisition of Sogou means that Tencent is entering the search engine field, which may have a significant impact on the search engine market. By comparing the changes of Tencent's assets and receivables before and after the acquisition and the rise and fall of Sogou's PC market share, this study analyzes the economic benefits of Tencent's merger and acquisition, and puts forward feasible suggestions for the future construction of Sogou. Tencent's merger and acquisition had a significant weakening effect on Sogou's market competitiveness, while the expenditure of merger and acquisition had no significant impact on Tencent's income, cost, and profit. So far, the positive effect of this acquisition has not been seen. In the future, Tencent may need to increase investment in Sogou's capital, technology and management, and combine the heritage of traditional search engine companies for development and business expansion. This case is one of the biggest merges & acquisitions cases in recent years, hence this paper try to discover the pros and cons within and after the acquisition.