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Qihoo 360 chairman cites national interest in Shanghai backdoor listing
November 6, 2017 / 11:50 AM / 12 days ago

Qihoo 360 chairman cites national interest in Shanghai backdoor listing

HONG KONG/SHANGHAI (Reuters) - Chinese cybersecurity software giant Qihoo 360 Technology Co Ltd said on Monday that the “national interest” was an important driver for its choice to return to the Chinese stock market via a potential $7.5 billion backdoor listing.

Qihoo 360 was listed in the United States from 2011 until its privatization last summer by a consortium led by its chief executive and founder, Zhou Hongyi, for about $9.3 billion.

Zhou told reporters in Shanghai on Monday that delisting in the United States and moving to China would allow it to become “a key member” of the country’s national cybersecurity strategy.

“(Cybersecurity) is a very special industry, no matter if it’s Chinese or Russian or American, as long as a cyber security firm grows big enough, it needs to be aligned with national interests,” he said.

Zhou’s remarks come ahead of U.S. President Donald Trump’s first visit to China this week, where cybersecurity is expected to be one of a number of thorny issues.

China wants to protect its “cyber sovereignty” in the same way it does its physical borders, and believes states should be allowed to govern and monitor their own cyberspace, controlling incoming and outgoing data.

Qihoo 360 said last week it was planning a backdoor listing on the Shanghai bourse after agreeing a 50 billion yuan deal with elevator maker SJEC Corp.

A backdoor listing is when a privately held company that may not qualify to make a public offering buys a publicly traded company.

The deal is being scrutinized by Chinese regulators and is seen as a litmus test for whether Beijing is relaxing curbs it imposed last year on A-share backdoor listings by overseas-listed Chinese companies.

Zhou said Qihoo 360 had become China’s largest cyber security firm, protecting personal and enterprise users, but also “many of the country’s sensitive units’ networks”.

“We have very deep collaboration with the military in cybersecurity protection in many ways, but those military licenses cannot be discussed,” Zhou told a news conference held to address regulatory concerns about the listing.

Reporting by Sijia Jiang in HONG KONG and Lin Qi in SHANGHAI; Editing by Hugh Lawson

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