Welcome to the Reuters.com BETA. Read our Editor's note on how we're helping professionals make smart decisions.
Skip to main content

N.Y. judge blocks investor's bid to halt Tencent's $3.5 bln Sogou buy

2 minute read

REUTERS/Tingshu Wang

  • Investor sued Sogou for allegedly denying shareholders' appraisal rights
  • Judge blocks injunction, says investor has no standing

(Reuters) - A New York federal judge has rejected an investor's request to block Tencent Holdings Ltd's $3.5 billion deal to take private Sogou Inc, one of China's top search engines.

U.S. District Judge Paul Gardephe in Manhattan said on Monday that he was denying Sogou investor Patrick Boylan’s motion for a preliminary injunction of the transaction because Boylan did not adequately allege how the omission of certain merger information hurt him.

Richard Rosensweig of Goulston & Storrs, one of Sogou’s lead attorneys, said in a statement on Tuesday that the firm and his client were “gratified" that the judge agreed with their position.

Attorneys for Boylan did not respond to requests for comment on Tuesday. Neither did representatives for Sogou and Tencent.

Sogou revealed in September 2020 that existing shareholder Tencent would take the company private. In July, China’s antitrust regulator approved the deal.

Boylan sued Sogou in March in Manhattan federal court, challenging the company’s claim that its shareholders didn’t have a right to reject the merger and asking the court to revalue the price of their shares.

Boylan said that under Cayman Island law, where Sogou is incorporated, the company’s shareholders have the right to have their shares appraised. He said that without knowing about their appraisal rights, shareholders could be forced into accepting the $9-per-share merger.

Sogou, in opposing the motion for a preliminary injunction, argued that Boyan didn’t have standing to sue.

In addition to failing to show harm, Gardephe said that Boylan didn’t adequately allege that the company had violated its disclosure obligations.

The case is Boylan v. Sogou Inc, U.S. District Court for the Southern District of New York, No. 1:21-cv-02041.

For Boylan: David Schwartz and Ira Schochet of Labaton Sucharow; and William Fields, Christopher Kupka and Samir Shukurov of Fields Kupka & Shukurov

For Sogou: Richard Rosensweig and Nicholas Cutaia of Goulston & Storrs

Read more:

Tencent to take China's Sogou private in $3.5 billion deal

China market regulator approves Tencent's $3.5 bln deal to take Sogou private

Sierra Jackson reports on legal matters in major mergers and acquisitions, including deal work, litigation and regulatory changes. Reach her at sierra.jackson@thomsonreuters.com

More from Reuters