Sina, an Internet Pioneer in China, Wards Off U.S. Activist



More than three-quarters of investors voted to keep Yichen Zhang, a board member who was seeking re-election, Sina said in a statement.

Charles Chao, Sina’s chairman and chief executive, said he was “grateful for shareholders’ support, input and participation” and “pleased that shareholders recognize the transformative growth and the unique value of the company.”

Still, Robert H. Lynch Jr., a partner at Aristeia, said “shareholders have sent a strong message to the company that change is needed and that the status quo is unsustainable and unacceptable.”

The proxy fight came to an end on Friday afternoon, after a group of about 20 shareholders and company executives gathered in a conference room on the 42nd floor of a high-rise in Hong Kong.

During the 25-minute meeting, a representative for Aristeia was given the opportunity to make a statement, according to two people who were present but who asked not to be named because they were not authorized to speak publicly.

Sina — which controls Weibo, one of China’s biggest social media platforms — seemed an unlikely target for an activist campaign. It has seen its share price soar over the past year as investors piled into technology stocks hoping to get a piece of China’s internet growth.

But the New York-traded internet company found itself in the cross hairs of Aristeia earlier this year when the shareholder accused Sina of “failing to hold itself to the standards expected of U.S.-listed public company boards.” Aristeia pushed Sina to consider a sale or merger of Sina or Weibo.

Sina’s operations include online entertainment and news. But its most valuable asset is a 46 percent controlling stake in Weibo, which is listed separately. The separate listing helped to trigger the proxy fight. Even as Sina’s shares jumped by nearly three-quarters this year, Weibo’s shares have more than doubled. Weibo is now more than twice as valuable as Sina.

The campaign was seen as a rare test of the power that American shareholders have in Chinese companies that are listed in the United States. It also touched a nerve for some investors who have complained about fewer shareholder rights in Chinese companies that are incorporated in business-friendly countries like the Cayman Islands. These investors have expressed frustration that some companies appear to be managed for the sole benefit of top executives.

“The bottom line is that Sina’s poor corporate governance, lack of substantive engagement with its shareholders and substantial valuation discount need to be addressed,” Mr. Lynch said, adding that Aristeia would continue to “pursue all avenues” to “further the goals of maximizing shareholder value and enhancing corporate governance.”

Responding to this criticism, Mr. Chao said on Friday, “We will continue engaging constructively with our shareholders toward our common goal of long-term value creation.”

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