Baring, Hony seal Giant Interactive buyout at $3bn

Giant Interactive founder Yuzhu Shi along with a PE consortium will privatise the Chinese online gaming company from the NYSE.

A consortium of investors led by Baring Private Equity Asia has entered into an agreement to buy China-based online gaming company Giant Interactive in a deal worth $3 billion, according to a statement.

The consortium includes Baring, Hony Capital and Giant Interactive founder Yuzhu Shi. Currently, consortium members own a combined 49.3 percent of the issued and outstanding shares.

The buyers have agreed to pay $12 per share for the New York Stock Exchange-listed business, representing an 18.5 percent premium over its closing price of $10.13 per share on 22 November and a 31.6 percent premium over its 30-day volume weighted average share price prior to 22 November – the day before the original go-private proposal was announced.

Baring and Shi had originally proposed to buy Giant Interactive in November for $11.75 per share, meaning the total deal would have reached $2.8 billion. Later in February, Hony was said to be considering joining the buyout but would not confirm its involvement at the time. 

The now $3 billion deal will be made up of equity commitments from Baring and China-focused Hony. The investment will be made from Baring’s $2.46 billion Asia Fund V, which closed in February 2011 “heavily oversubscribed”, according to the firm. Hony will also invest from its fifth private equity vehicle.

The transaction will also use $850 million in debt financing arranged by banks including China Minsheng Banking Corp, BNP Paribas, Credit Suisse, Deutsche Bank , Goldman Sachs, ICBC International Finance and JPMorgan Chase, according to the statement.

The deal stands to be the biggest private equity take-private of a US-listed Chinese company since the $3.7 billion privatisation of Focus Media in December 2012.

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.