Qihoo 360 announced that it has sent a written notice to Coolpad recently, requiring it to repurchase all the 49.5% equity that Qihoo 360 owns in the joint venture company that the two sides have jointly set up, this requirement is in accordance with the contents of the shareholder agreements, and the total value is about $1.485 billion. Qihoo 360 said it hoped Coolpad could stop violating behaviors of the joint venture agreements through this move, and stop the sustained damage that it brought by cooperating with LeTV, which is Qihoo 360’s competitor. The joint venture company was established in December 2014, which aimed to sell mobile devices through the Internet based channels.
According to the shareholder agreements of the joint venture company, if Coolpad conducted violations, Qihoo 360 has the right to exercise the put option and sell all its equity to Coolpad at double of the market price. At present, Qihoo 360 has sent a written notice to Coolpad, based on its series acts that in violation of the agreements, Qihoo 360 decided to exercise the related put option. The written notice also shows that the total capital of the joint venture company is valued at $1.5 billion, and the 49.5% equity of Qihoo 360 is of $742.5 million, therefore, Coolpad should pay $1.485 billion to buy Qihoo 360’s equity.
The cause of this incident is due to violation of the contract by Coolpad, which introduces competitors and brings serious influences on the future development of Qihoo 360. Qihoo 360 and its team communicated over and over again with Coolpad, however, no results were achieved and Qihoo 360 finally made a realistic choice to solve the problem.