Photo: CFP

Leading domestic online video platform Qiyi.com Inc will seek a listing in the Chinese mainland at an appropriate time once a privatization plan is finished, CEO Gong Yu said Saturday in an internal letter addressed to all staff, according to a report from tech.qq.com Saturday.

The letter came on the heels of an announcement from Chinese search engine giant Baidu Inc late Friday, which said that its board of directors has received a nonbinding proposal from Robin Li Yanhong, chairman and CEO of Baidu, and Qiyi's own CEO, offering to purchase all of the outstanding Qiyi shares owned by Baidu.

The proposal values the shares of Qiyi at $2.8 billion on a cash- and debt-free basis, according to the announcement. Baidu holds 80.5 percent of Qiyi's total outstanding shares.

The offer is intended to get more support from the Chinese market and more access to financing, Gong explained in the Saturday letter, according to the report from tech.qq.com.

After the transaction is completed, Qiyi will remain a strategic partner of Baidu and sign cooperation agreements with the latter, the Baidu announcement said.

Neither company was available for comment Saturday.

Qiyi said in an official statement that the offer is awaiting a review and decision by Baidu's board, noted the report from tech.qq.com. Qiyi is very optimistic about the domestic capital market, but a domestic listing is not its ultimate development goal, said the report.

"Qiyi will select an appropriate time to launch a public float based on its business development," Qiyi said.

Analysts generally believe the takeover offer by Li and Gong will eliminate the company's variable interest entity structure, enabling it to go public in the mainland.

"Qiyi doesn't meet the current requirements for a listing in the mainland, but I think it probably aims at a float on the new strategic emerging board, which is expected to launch during the middle of this year or in the second half," Chen Wei, an analyst with Beijing-based investment consulting firm ChinaVenture, told the Global Times Saturday.

An official from the China Securities Regulatory Commission said that the ­Shanghai Stock Exchange will roll out a strategic emerging industry board this year to better serve domestic high-growth and innovative companies, the Xinhua News Agency reported in December 2015.

Chen added the valuation gap between the US and Chinese markets is the main factor motivating the proposal.

"The domestic market provides a much, much higher valuation for Internet companies than the US market," Chen noted, adding that many US-listed Chinese companies are considering privatization because of this gap.

Zhang Yi, CEO of Guangzhou-based market consultancy iiMedia Research, said that, "As far as I know, at least 80 percent of the US-listed Chinese Internet companies currently have privatization plans or are ­planning on a market exit." He cited the sharp falls in their share prices as a major reason.

As of the Friday close, for example, shares of Alibaba Group Holding ended at $60.89, half the high of $120 recorded in November 2014, while Renren Inc shares were at $2.73, down from $24 in May 2011. Jumei International closed at $5.49, down from $31.57 in September 2014.

"Moreover, the costs of maintaining a ­listing are very high in the US, which means those companies need to spend heavily ­every year on accounting and legal issues to meet local requirements," he told the Global Times on Saturday. "Finally, their mainland-listed counterparts have been warmly welcomed in the domestic market recently, a factor that will definitely draw more Internet companies in the future."

Shares of Shenzhen-listed Beijing Baofeng Technology Co, which have been suspended from trading since October 2015, were last priced at 95.83 yuan ($14.57), with a price-earnings (PE) ratio of nearly 800. Leshi Internet Information & Technology Corp was last priced at 58.80 yuan, with a PE ratio of more than 200.