Tencent Holdings Ltd., China's leading Internet firm, has invested $448 million in Sogou, the search engine arm of Internet company Sohu.com Inc., the companies announced on September 16.

As part of the strategic cooperation, Tencent also merged its Soso search related businesses and other assets with Sogou.

Tencent holds 36.5 percent of Sogou's equity capital on a fully-diluted basis, which could increase to approximately 40 percent in the near future, the companies said.

The move will expand Sogou's market presence and "significantly elevate its position in the highly competitive PC search market, and even more so in the rapidly evolving mobile search market," said Charles Zhang, Chairman and CEO of Sohu.

Sohu, together with its affiliates, remains the controlling shareholder of Sogou, which will continue to operate independently as a subsidiary of Sohu.

Tencent and Sogou have agreed to jointly develop, cross-promote and integrate their respective products and services, while collaborating in areas of search technology, user insights and data sharing, according to the press release.

Sogou's products include the No. 1 Chinese character pinyin input method on PCs and mobile devices, the No. 3 PC browser and No. 3 PC search engine in China by page views, according to market research institutions.