Chinese online games developer and operator, Shanda Games, has been offered US$1.9 billion by its main shareholders to take the company private, resulting in a 15 percent jump in its share price.
Shanda Interactive Entertainment and an affiliate of Primavera Capital, which together own 76 percent of the games operator, issued a non-binding offer to purchase the company for US$3.45 an ordinary share, according to a Bloomberg report.
In a statement released Monday, Shanda Games said it was assessing the proposal and will form a special committee comprising indepdent directors to evaluate the bid as well as consider "other strategic options". If accepted, the US$1.9 billion will be financed with equity capital and third-party debt, the company said.
"The board has just received the proposal letter and has not made any decision," it added. "There can be no assurance that any definitive offer will be made by the consortium or any other person."
According to its website, the company currently operates 54 online games and mobile games, including games licensed from Chinese as well as international developers. In 2012, it has a base of 18.8 million average monthly active users and 3.8 million average monthly paying users. It also licenses its MMORPG (massively multiplayer online role-playing game), Dragon Nest, overseas including a localized version in the Singapore market.
The company's buyback proposal pushed its stock price to a two-year high, climbing 15 percent to close at US$6.50 on Tuesday, according to Bloomberg, which noted that 46 Chinese companies had unveiled deals to delist from the U.S. stock exchange since 2011. This had resulted in concerns over corporate governance and accounting processes in these companies.
Shanda Games was one of top five Chinese game operators that, in 2012, contributed US$5.3 billion to the country's overall US$6.6 billion online games revenue. The top five list comprised was led by Tencent at US$2.5 billion, Netease at US$1 billion, Shanda Games at US$838 million, Changyou at US$485 million, and Perfect World at US$474 million.
China's online games market is expected to exceed US$9.2 billion this year.