Backed by JPMorgan and Goldman Sachs, Baidu announced today it will be issuing bonds of $1.5 billion US dollars in total . Half will be issued in 5-year bonds at 2.25% interest and the other half will be in 10-year bonds at 3.5% interest.
Stating that the cash will be used to repay debt and applied for general corporate purposes, Baidu appears to be preparing for potential new contingencies in the market and possible M&A activity in the future. This comes just a few weeks after Baidu’s CEO Robin Li warned his company not to get too comfortable at the top and instead plan for more aggressive or “wolf-like” behavior.
Baidu has already begun to expand into new services, including its Baidu Cloud service and its recently released mobile phone. There is considerable reason for Baidu to start pushing its position on several fronts. The humble search giant is starting to gain some competition from the likes of market-bully Qihoo 360, who recently released their own search engine, gaining almost 10% market share since the launch.
We reached out to Baidu’s Kaiser Kuo, who said that in addition to repaying some debt, the funds may be used for M&A in both China and abroad.
“Part of the raise may fund expansion and operation in these markets. And it certainly could include M&A. While we have no specific M&A deals pending at present, Baidu always wants to be ready to make prudent investments and acquisitions when good opportunities present themselves,” says Kaiser.
Baidu’s stock closed at $94.05 on Monday after a 1.76% rise of $1.63.