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Sohu.Com Receives Proposal To Sell Common Stock

BEIJING, CHINA – Inc. (NASDAQ: SOHU), China's leading online media, search, gaming, community and mobile service group (“Sohu” or the “Company”), today announced that its Board of Directors (the “Board”) has received a preliminary, non-binding indicative proposal (the “Indicative Proposal”) from Dr. Charles Zhang, the Company’s Chairman and Chief Executive Officer, for an investment by a special purpose entity (the “Equity Purchaser”) to be formed by Dr. Zhang and a third-party private equity firm to be identified by him.

Terms of the Indicative Proposal suggest a transaction between the Company and the Equity Purchaser whereby the Equity Purchaser may purchase, in equal purchase price amounts, (i) shares of Common Stock of the Company (with the purchase price per share being at the last sale price of the Common Stock as of the day before the date that a subscription is signed, but subject to a maximum of $50 per share) and (ii) notes convertible into Common Stock of the Company, with interest payable semi-annually at an interest rate, a maturity date, and a conversion price to be determined, for a total purchase price of up to US$600 million in cash. The Indicative Proposal states that the suggested terms are intended for discussion purposes only and are subject to the final expression of the terms of the transactions as set forth in definitive documentation.

A special financing committee of the Board, consisting solely of independent and disinterested directors, will consider and make recommendations to the Board regarding the Indicative Proposal. The special financing committee has retained Kirkland & Ellis as its legal counsel and Barclays Bank PLC as its financial adviser in connection with its review and evaluation of the Indicative Proposal.

The Company cautions investors and others that the Indicative Proposal is non-binding and incomplete, and that no decision has been made by the Board or the special financing committee regarding the Company’s response to the Indicative Proposal. There is no assurance that any definitive proposal will be made by the Equity Purchaser; that any agreement will be reached between the Company and the Equity Purchaser; that an investment by the Equity Purchaser will be completed; or that any other financing transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.