Consortium Makes Shanda Games Buyout Offer

NEW YORK (TheDeal) -- Shanda Games (GAME) could be the latest Chinese company to be taken private if it agrees to an offer from a group that includes its controlling shareholder, in a deal valuing the online game developer's equity at $1.9 billion.

Shanghai-based Shanda Games revealed Monday that it has received a preliminary nonbinding buyout proposal from controlling stakeholder Shanda Interactive Entertainment and an affiliate of Primavera Capital, which already own a combined 76.2% of the company's outstanding shares.

The consortium offered to pay $6.90 per American Depositary Share for the 23.8%, or 65.5 million shares, of Shanda that it doesn't already own. That would value the buyout at approximately $452 million. The offer represents a 22.1% premium over Shanda's Friday closing price of $5.65.

The buyout proposal comes about two months after Shanda Game's larger rival, Giant Interactive Group (GA) received a preliminary take-private offer from its chairman, Yuzhu Shi, and Baring Private Equity Asia on Nov. 25. Shi and Baring already own 47.2% of GIG's outstanding shares. Their offer values the Shanghai-based company at more than $2.8 billion.

Other recent Chinese take-privates include Beijing-based telecom software company, AsiaInfo Linkage, which on Jan. 15 was bought out by Power Joy, a portfolio company of Citic Capital China Partners II, in a deal valued at $890 million. Tech outsourcer Pactera Technology International, also of Beijing, on Oct. 17 agreed to be taken private by a Blackstone Group-led consortium for $625 million.

In Shanda Games' case, the proposal by the consortium of Shanda Interactive and the Primavera Capital affiliate is a "preliminary indication of its interest" to finance the transaction using equity capital and third-party debt.

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