Giant Investment Ltd. agreed to acquire Giant Interactive Group Inc., a China-based online-gaming developer, for $3 billion and take it private.
The $12-a-share price is 18.5 percent more than Giant Interactive’s closing price of $10.13 on Nov. 22, before Giant Investment made its initial offer, the companies said in a statement. The price represents a 5.3 percent premium to Giant Interactive’s closing price of $11.40 on March 14.
Giant Interactive is the maker of the game “ZT Online.” Last August, Chief Financial Officer Jazy Zhang said the company’s shares were undervalued by more than 60 percent as the developer was hurt by allegations of irregularities at other Chinese companies.
“Some Chinese online gaming companies think their value has been underestimated in the U.S.,” said Echo He, an analyst with Maxim Group LLC, based in New York. “Investors think the PC gaming market in China has already matured and they favor mobile gaming companies.”
Shares of Shanghai-based Giant Interactive have risen 81 percent in the past year.
Free-to-play online and mobile games are more popular forms of gaming in China than titles played on consoles, Shanghai-based Spicy Horse Games founder American McGee said in August.
Chinese mobile gamers were expected to rise 30 percent to 280 million last year, according to Analysys International estimates.
Giant Interactive said in the statement it expects the transaction to close in the second half. The buyers, who include company Chairman Yuzhu Shi, Baring Private Equity Asia Ltd. and other entities, currently own about 49.3 percent of Giant Interactive’s shares outstanding.
Last month, Bloomberg News reported the buyers were seeking an $850 million, five-year acquisition loan to fund the deal, according to two people familiar with the matter.
Today’s statement said China Minsheng Banking Corp., BNP Paribas SA and Credit Suisse Group AG have arranged a loan.