Giant Interactive Group Inc
) reached a new 52-week high of $11.47 on Dec 09 after the
company received a buyout offer from its chairman Yuzhu Shi and
an affiliate of BaringPrivate Equity Asia (collectively called
'consortium') on Nov 25. In fact, shares of this leading Chinese
online game developer have been rising ever since it reported
solid third quarter 2013 results on Nov 6. Shares of Giant
Interactive closed at $11.39, reflecting a year-to-date return of
The company's long-term estimated EPS growth rate is 15.61%.
Average volume of shares traded over the last three months came
in at approximately 2,793K.
On Nov 25, the company received a buyout offer where the
consortium proposed the acquisition of all of the company's
shares, including American Depositary Share (ADS) for $11.75 per
share/ADS. Each ADS represents one ordinary share of the
Per the deal, the consortium will pay about $2.82 billion in
cash, which will be financed using a combination of debt and
equity capital. As of Nov 25, the consortium owned about 47.2% of
the company's shares.
Giant Interactive has formed a special committee to review the
proposal. Additionally, the special committee has retained
Fenwick & West LLP as its U.S. legal counsel and Kilometre
Capital as its external strategic consultant. They will assess
the offer and negotiate terms to provide maximum value to its
Strong Third Quarter Results
The company reported strong third quarter 2013 results in
early-November, where adjusted earnings of 25 cents increased 1%
on the back of top-line growth. Earnings also beat the Zacks
Consensus Estimate by 8.7%. Net revenue was in line with the
Zacks Consensus Estimate and grew 8.6% year over year, driven by
an increase in active paying accounts for online games and
increase in average revenue per user for online games. Gross
profit also increased 9.5% year over year on account of higher
Moreover, the company is optimistic about expanding its
portfolio in 2014 and hopes to launch several new mobile games.
The company has a prudent expense management system and continues
to explore other cost effective distribution channels to enhance
Other Stocks to Consider
Giant Interactive is currently holds a Zacks Rank #4 (Sell).
Some better ranked Internet retailers include
Taomee Holdings Ltd
). All of them sport a Zacks Rank #1 (Strong Buy).
GIANT INTERACTV (GA): Free Stock Analysis
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