Making good on a November Marbridge Consulting report, Baidu (BIDU +4.1%) has reached a deal to acquire Perfect World's (PWRD +1.8%) Huanxiang Zongheng online literature business (provides Chinese e-books, digital comics, and animations) for RMB191.5M ($31.5M). (PR)
Marbridge previously noted Zongheng offers 100K+ e-book titles, receives 60M+ daily page views, and gets over 1/3 of its site traffic via mobile.
The purchase is the latest in a string of 2013 acquisitions by Baidu, as the Chinese search giant attempts to create a far-reaching empire of Web/mobile content and services. Prior acquisitions: PPS, 91 Wireless, Nuomi.
Perfect World says the deal will allow it to focus on its core online gaming business. The company has been investing heavily in both developing new games and promoting existing ones.
A source close to Baidu (BIDU) tells Marbridge Consulting the Chinese search giant is close to buying Chinese literature/comics/animation site Huanxiang Zongheng, a unit of online gaming firm Perfect World (PWRD). The source adds more info about the deal will be released on Nov. 26.
Zongheng offers 100K+ online book titles, and receives 60M+ daily page views. It also offers iOS, Android, and Windows Phone apps, and gets over 1/3 of its site traffic via mobile.
Baidu has stepped up its M&A activity this year, as it tries to evolve into a broader, Google-like provider of Internet services and apps. The company has already bought video site PPS and top Android app store 91 Wireless, and a 59% stake in daily deals site Nuomi.
Perfect World (PWRD +4.3%) is spending RMB255M ($41.9M) to acquire Chinese online gaming portal owner Wuhu Huitan, and another RMB40M ($6.6M) to buy a minority stake in fellow portal owner Beijing Huitan. Both companies were previously "controlled by an individual unrelated to Perfect World." (PR)
The companies run TGBus.com and PTBus.com, which Perfect World declares are "two of the most popular gaming portals among Chinese players." Look for Perfect World to aggressively promote its online gaming titles through the portals going forward.
Q3 results are due on Nov. 25. Shares sold off in August following Perfect World's Q2 beat, largely due to spending concerns, but are still up 69% YTD.
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.
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.