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Shanda Games Acquires Two Companies From Parent

Shanda Games Limited has signed a final agreement with its parent company Shanda Interactive Entertainment Limited to acquire two subsidiaries from the latter.

The two subsidiaries involved are Shanghai Shengzhan Networking Technology Company Limited and Tianjin Shengjing Trade Company Limited, for which Shanda Games will pay USD811.5 million. Both of the companies are physical companies under Shanda Interactive Entertainment Limited. Shanghai Shengzhan has activity statistics of registration, payment, and access of users of Shanda Games; while Tianjin Shengjing holds about 180,000 pre-paid card distribution channels across China.

Chen Tianqiao, chairman of Shanda Games, said that the acquisition will effectively cut two major parts from the cost structure of Shanda Games, which will promote the increase of the company’s earnings per share by 40% to 50%. Prior to this, Shanda Games had been paying for the network payment, user registration, customer service, channel service, user fatigue system, data support, and pre-paid card marketing services provided by the two companies. During the first quarter of 2013, those costs accounted for 21.3% of the net operating revenue of Shanda Games.

The USD811.5 million payment of the transaction will be realized via a combination of cash, deferred payment, and settlement of an outstanding loan receivable from Shanda Interactive. The transaction is expected to be completed in the third quarter of 2013.

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