Giant Interactive Receives Unanimous Vote for Merger

Zacks Equity Research
July 15, 2014

Giant Interactive Group Inc. (GA), announced that approximately 99.6% shareholders are in favor of the company’s merger agreement with Giant Investment Limited and Giant Merger Limited, a wholly owned subsidiary of Giant Investment.

The voting was done at an extraordinary general meeting of shareholders held on Jun 16, where approximately 80% of Giant’s entitled shareholders voted in person or by proxy.

The merger agreement was confirmed in Mar 2014, which was later amended in May 2014. Under the agreement, Giant Investment will acquire Giant Interactive for $12 per share and $12 per American Depositary Share (ADS), totaling $3 billion. Each ADS represents one ordinary share of the company.

The merger is expected to be completed by the end of July. Following the merger, Giant Interactive will become a privately held company and no longer trade on Nasdaq.

The merger was announced last year in November, when the company received a buyout proposal from its chairman Yuzhu Shi, who owns 49.3% of the company. The consortium proposed the acquisition of all the company shares, including ADS for $11.75 per share/ADS.

On May 27, 2014, Giant Interactive reported first quarter fiscal 2014 adjusted earnings of 22 cents (on a local currency basis). Earnings were almost flat year over year, owing to weak sales. Earnings, however, lagged the Zacks Consensus Estimate of 25 cents by 12%. Giant Interactive holds a Zacks Rank #4 (Sell).

Some better-ranked Internet retailers worth considering include Yelp Inc. (YELP), China Distance Education Holdings Ltd. (DL) and Shutterfly Inc. (SFLY). While China Distance sports a Zacks Rank #1 (Strong Buy), Yelp and Shutterfly have a Zacks Rank #2 (Buy).

Read the Full Research Report on YELP
Read the Full Research Report on GA
Read the Full Research Report on SFLY
Read the Full Research Report on DL


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