Seeking Alpha

Shanda -21.4% on M&A news; peers off thanks to Sohu/Changyou

  • Shanda (GAME) is nosediving as investors balk at the price it's paying to acquire affiliates responsible for handling its online game billing and customer service work, among other activities.
  • One of the affiliates (Shengzhan) owns valuable data about user activity. The other (Shengjiang) runs a network that sells 2M+ real/virtual prepaid gaming cards via 180K distribution channels.
  • Shanda claims service fees paid to the affiliates made up 21.3% of its Q1 revenue, and that buying the companies will help it deliver the kind of integrated platform it considers crucial for mobile success.
  • Shanda is paying for the deals with cash, deferred payments, and the settlement of an outstanding loan receivable.
  • Shares had more than doubled since early May before today's plunge.
  • Fellow online game providers NetEase (NTES -2.6%), Qihoo (QIHU -4.1%), Perfect World (PWRD -5.3%), and Giant Interactive (GA -5%) are selling off. Sohu and subsidiary Changyou's disappointing Q2 results and Q3 guidance are the main trigger, though a moderate selloff in Shanghai isn't helping either.
Comments (1)
  • GA or GS/GE?
    , contributor
    Comments (14) | Send Message
     
    now it's time for you to buy GA cheaper since as my investigation, GA will be pretty Q2 earning release next week, this is not bet, it's based on its charming divdends and newly tested new games.
    let's see what's happening next week!
    29 Jul 2013, 06:55 PM Reply Like
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