Primavera plots take-private play

Valued at $1.9bn, US-listed Shanda Games is the latest Chinese target for private equity.

Hong Kong-based Primavera Capital and controlling shareholder Shanda Interactive have made a non-binding proposal to acquire NASDAQ-listed Shanda Games, a Chinese online game developer in China, according to a statement.

The consortium, which already owns 76.2 percent of the business, is offering $6.90 per American depositary share, valuing the entire company at $1.9 billion.

The offer price represents a premium of 44.4 percent to Shanda’s volume-weighted average over the 30 days prior to the offer, and a 21.3 percent premium over its closing price last Friday.

Under the terms of the proposal, the transaction will be financed with a combination of equity and third-party debt, although the exact debt-to-equity split was not disclosed.

Primavera did not respond to requests for comment by press time.

Shanda Games is a Chinese developer and operator of online games, based in Shanghai. The company was founded in 1999 by online gaming pioneer Chen Tianqiao, who in 2013 appeared at number 83 on the Forbes China Rich List.

While China’s private equity firms are sweeping up a wide range of Chinese assets listed in the US, the Shanda proposal is the second in the games industry, with online gaming maintaining its popularity in Asia.

In November, Chinese online game developer Giant Interactive, an NYSE-listed company, received a take-private bid of $11.75 per share from Baring Private Equity Asia and Giant's chairman Yuzhu Shi, according to an earlier statement. 

While these deals have been proposed, they often take a long time to close – sometimes up to two years, industry sources say.

Earlier in January, two years after launching the proposal to privatise Chinese software firm AsiaInfo-Linkage, CITIC Capital Partners closed the transaction, Private Equity International reported earlier.

“These deals always take a year. In this case, because of the added complexities relating to China and the domestic approval process, it took more,” Brian Doyle, managing partner at CITIC, told PEI at the time.