One of China's leading online game developers,
Giant Interactive Group Inc.
), recently announced the formation of a special committee of
three members to evaluate the preliminary buyout offer received
from its chairman Yuzhu Shi and an affiliate of BaringPrivate
Equity Asia (collectively called 'consortium'). The company's
board received the offer on Nov 25, 2013.
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 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
Giant Interactive has formed a special committee, comprising
three independent directors of the company, Peter Andrew Schloss,
Andy Y. Yan and Jason Nanchun Jiang 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 shareholders.
In November, Giant Interactive reported third quarter 2013
results, wherein its adjusted earnings increased 1% to 25 cents
per share 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
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 it continues to
explore other cost effective distribution channels to enhance
Giant Interactive is a leading online game developer and
operator in China in terms of market share and focuses on
massively multiplayer online role playing games. Currently,
Giant operates multiple games, including the
ZT Online 1 Series, ZT Online 2, Elsword
World of Xianxia
Giant Interactive holds a Zacks Rank #3 (Hold). Other better
ranked Internet retailers include
Taomee Holdings Ltd
). While Taomee and YY sport a Zacks Rank #1 (Strong Buy),
Brightcove holds a Zacks Rank #2 (Buy).
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