Chinese online game developer Giant Interactive, an NYSE-listed company, has received a take-private bid of $11.75 per share from Baring Private Equity Asia and Giant's chairman Yuzhu Shi, according to a statement from the target company.
The proposal represents a premium of 21 percent to the company's closing price on 22 November 2013 and a premium of 29.1 percent to the volume-weighted average closing price during the previous 30 trading days.
If accepted, the total deal will be worth $2.8 billion, which would be the largest privatisation of a Chinese company on a foreign stock exchange this year.
The consortium aims to buy all outstanding shares in the business, which is already approximately 47.2 percent-owned by the bidders. They will use a combination of equity and debt, according to the proposal letter, although the exact split is unclear.
Baring declined to comment on the offer.
The investment will be made from Baring’s $2.46 billion Asia Fund V, which closed in February 2011 “heavily oversubscribed”, according to an earlier company statement. The fund is 60 percent larger than its $1.52 billion predecessor.
Baring joins other Asian private equity firms who have looked to the US to acquire Chinese assets, many at high premiums.
In October, The Blackstone Group bought NASDAQ-listed Pactera Technology, a China-based IT consulting firm, for $625 million, Private Equity International reported earlier. Shareholders received $7.30 per common share, representing a 39 percent premium over its 19 May share price – the day before the announcement of the deal.
Similarly, Morgan Stanley Private Equity Asia privatised Chinese agricultural business Yongye International in September in a $339 million deal underwritten by the China Development Bank, PEI reported earlier.
The Baring-backed investment will be the largest such deal to take place since a consortium of private equity firms privatised Chinese digital advertising agency Focus Media in a $3.7 billion landmark deal in December last year.
The consortium included The Carlyle Group, FountainVest Partners, China Everbright and CITIC Capital Partners, as well as Jason Jiang, Focus Media chairman and major shareholder.
Investing in US-listed Chinese companies has appealed to a number of GPs as undervalued assets trading on US stock exchanges can be bought at low prices. However, industry sources have expressed concerns over the trend, saying some firms are overpaying for assets they can’t effectively do due diligence in order to use up dry powder.
However, defenders of the strategy have previously noted that a number of these deals are generated from relationships with founders cultivated over many years, as was the case with Focus Media and Pactera, industry sources told PEI.
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