Senior executives of the once-popular Chinese social network Renren have made a buyout offer for the company in response to its declining performance.
CEO Joseph Chen and COO James Jian Liu asked to acquire all outstanding shares in the Nasdaq-listed company for US$4.20 per depositary share, or US$1.40 per ordinary share, a spokesperson for Renren told the South China Morning Post on Thursday.
This would value the company at US$1.4 billion.
Renren, formerly hailed as China’s answer to Facebook, attracted more than 100 million users at its peak in 2013. It went public in 2011 with an opening price of US$19.5 per share.
Back then, it was valued at US$7.48 billion, significantly higher than NetEase, Sohu and Sina, three of the largest Chinese portals at the time.
But its fortunes dipped due to a wave of social networks inluding Sina Weibo, which now has 275 million users, and WeChat, which claims 500 million.
Renren also lost substantial funding and made a number of poor investments.
In 2011, it spent US$80 million to purchase 56.com, a video website, but sold it three years later to Sohu for just US$20 million.
It lost another US$50 million by snapping up a large chunk of group-purchasing website Nuomi.com in 2012 and offloading it to Chinese web giant Baidu in 2014.
Renren posted a net lost of US$27.6 million in the first quarter of this year, an operating loss of US$26.5 million and gross profit of just US$3.2million, down 72.9 per cent from the corresponding period in 2014.
Now its glory days look far behind it.
It was founded in 2005 as a social network linking Chinese colleges and students called Xiaoneiwang, which roughly translates in English as “internal school network”.
Joseph Chen purchased the website in 2006, merged it with its own social network, 5Q, and renamed the company Renren in 2009.
Similar to Facebook, it promoted broader social networks and targeted young people. It later expanded to over 33 large Chinese cities.
Among its business growth strategies, Renren tried to popularise hot topics, stir debate and introduce trendy video games. Happy Farm, its most popular game, attracted over 100 million users at its height.
But these ploys started to look old-fashioned as the site’s audience matured.
Zander Wang, a 27-year-old IT worker in Beijing who was a huge fan in 2006, said he had turned his back on Renren by 2011.
“The topics it promoted for students became less appealing when I started to work. I also found that I have less time to play video games,” he said.
He said most of his friends had also migrated over to Weibo and Wechat.
“We have much more sophisticated interests now. Renren could not satisfy us any more,” he said.