Shares of Giant Interactive Group Inc. (GA) reached a 52-week high of $11.89 per share on Jun 27 since the company announced to hold an extraordinary general meeting of shareholders to consider and vote on the merger agreement of the company with Giant Investment Limited and Giant Merger Limited, a wholly-owned subsidiary of Giant Investment. Shares of Giant Interactive eventually closed at $11.85 on Jun 27, with share prices rising 5.9% year-to-date.
On Jun 16, the company announced that it will hold an extraordinary general meeting of shareholders on Jul 14, to consider the merger proposal of the company with Giant Investment Limited and Giant Merger Limited, a wholly-owned subsidiary of Giant Investment.
On Mar 17, the company confirmed its merger agreement, where Giant Investment will acquire Giant Interactive for $12 per share and $12 per American Depository Share (ADS), totaling $3 billion. Following the merger, which is expected to close in the second half of 2014, Giant Interactive will become a privately held company and no longer trade on Nasdaq.
In Nov 2013, the company received a proposal from its chairman Yuzhu Shi, who already owns 49.3% of the company, to purchase the rest with cash and proceeds from debt financing for $2.82 billion in cash. The company announced the formation of a special committee of three members to evaluate the preliminary buyout offer. The consortium proposed the acquisition of all of the company’s shares, including ADS for $11.75 per share/ADS. Each ADS represents one ordinary share of the company. The committee assessed the offer and negotiated terms to provide maximum value to its shareholders.
Giant Interactive is a leading online game developer and operator in China in terms of market share and focuses on MMORPGs. The company has been focusing on its mobile game strategy and is keen on expanding the mobile game market in China. The company is set to roll out its first self-developed mobile games in 2014. In addition, it has 10 mobile game projects currently under development.
The company is optimistic about expanding its portfolio in 2014 and hopes to launch several new mobile games. The company has a prudent expense management system and continues to explore other cost effective distribution channels to enhance profitability.
Giant Interactive holds a Zacks Rank #4 (Sell).
Other Stocks to Consider
Investors interested in Internet retailers can consider stocks like Brightcove, Inc. (BCOV), China Distance Education Holdings Ltd. (DL) and Shutterfly, Inc. (SFLY). While Brightcove sports a Zacks Rank #1 (Strong Buy), China Distance Education Holdings and Shutterfly hold a Zacks Rank #2 (Buy).