Major Baidu shareholder challenges sale of iQiyi to chairman Robin Li

New York hedge fund Acacia Partners, a major shareholder in search engine Baidu, has requested the Chinese firm’s chairman Robin Li withdraw his bid to take online video site iQiyi private, claiming the proposed sale price was “far too low”.

In an open letter to Li dated Monday, Acacia said: “We strongly believe the purchase by you of iQiyi is against the best long-term interest of Baidu and its shareholders.”

And it accused Li of turning Baidu into “an extension of the pocketbook of one man”.

If he were to proceed with the transaction, Acacia said the deal represented “inherent conflicts of interest”.

Baidu ramped its investment in iQiyi from 5.1 per cent to 8.7 per cent of its revenue over the past year, and the letter described that as “a donation by Baidu’s shareholders to future iQiyi shareholders”.

As an alternative it now suggests Baidu could spin off iQiyi through an IPO, maintain partial ownership, or do a rights issue allowing all Baidu shareholders to have a chance of benefiting from ownership in iQiyi on equal terms.

Baidu announced in February it was selling iQiyi, China’s leading online video site, of which it owns 80.5 per cent of the diluted shares, to Li, valuing the business at US$2.8 billion.