EXCLUSIVE: IDG in advanced talks to sell itself to Chinese buyout group - sources

By Liana B. Baker

SAN FRANCISCO (Reuters) - International Data Group, a pioneer in technology publishing and owner of such venerable names as PCWorld and the market research firm IDC, is in talks to sell itself for more than $1 billion to a Chinese investor group headed by IDG of Greater China chairman Hugo Shong, according to people familiar with the matter.

The identity of the other investors in the group and the exact size of the deal could not be learned. The privately held company had been seeking a valuation of $500 million to $1 billion, according to the people, who did not want to be named because the matter is private.

While the parties are in advanced discussions, no deal is finalized and talks could fall apart at any time, the people cautioned.

IDG, based in Framingham, Massachusetts, declined to comment. Shong could not immediately be reached for comment.

Founded in 1964, IDG has grown to be one of the largest global trade publishers, with hundreds of tech-focused websites and magazines. Its charismatic founder and longtime CEO, Pat McGovern, died two years ago.

IDG said in January that its board of directors hired investment bank Goldman Sachs to explore strategic options. Goldman Sachs declined to comment.

McGovern was very early to see the importance of China, and IDG has been doing business there since 1980, when it launched ComputerWorld China.

IDG has traditionally pursued a licensing model in which overseas publishing partners have broad latitude in what type of content they produce. That, in addition to IDG's focus on business rather than politics, helped the company get an early foothold in China and steer clear of press restrictions.

But the sale of the company could face regulatory troubles. The Chinese buyout group will likely need to seek approval from the U.S. Committee on Foreign Investment (CFIUS), the government panel that scrutinizes deals over national security concerns before finalizing any deal, according to the sources.

CFIUS has already caused a number of high-profile deals to fall apart, and President-elect Donald Trump's tough commentary on China has made the future of that country's investment in the United States even less certain.

One area regulators may dissect is the role of IDC, the market research division of the company that consults many U.S. technology companies on IT spending and business strategy and also keeps track of product shipments, the sources added.

The U.S. watchdog has recently expanded its reach beyond traditional sectors of national security concern, such as aerospace and semiconductors, to less obvious areas including commercial IT and electronics.

If the IDG deal is completed, it would be the latest media asset to be sold to Chinese investors, following deals this year including Wanda's $1 billion announced acquisition of Dick Clark Productions this month.

J.D. Power and Associates, a data provider on customer satisfaction for big brands was also sold to a buyout group with Chinese funding earlier this year.

Shong, a former electrician turned publisher, was a close associate of IDG founder McGovern. Shong formed one of China's first technology venture capital firms in 1993, initially with IDG's backing, and became the founding general partner of IDG Capital Partners.

IDG Capital Partners, which is still a very active venture capital firm in China, invested early in some of China's biggest Internet companies such as Baidu Inc, Tencent Holdings LTD and Ctrip.com International Ltd.

(Reporting by Liana B. Baker in San Francisco; additional reporting by Matthew Miller in Beijing; Editing by Jonathan Weber and Stephen Coates)