Giant Interactive Group Inc., a Chinese online gaming developer, has accepted a $3 billion offer to take the company private. The bid comes from Giant chairman, Shi Yuzhu and private equity firms Baring Private Equity Asia, and Hony Capital of China. Giant, which has been listed in New York since 2007, agreed to the $12 per share deal after initially rejecting a deal put forward in November that valued the shares at $11.75.
While many Chinese Internet and e-commerce companies are preparing for initial public offerings (IPO) in 2014, Giant and several other Chinese companies are going private after just a few years of being listed. Shanda Interactive and Focus Media are two others. Shanda raised $1 billion in one of the biggest IPOs in the United States in 2009, but entered into a buyout plan in 2012 that was valued at $2.3 billion. Focus Media went private in May 2013 for $3.8 billion.
According to the New York Times, these American-listed Chinese companies feel they are the victims of short-seller “attacks” that have resulted in slumping share prices. “Some Chinese online gaming companies think their value has been underestimated in the US,” said Echo He, an analyst with Maxim Group LLC, in a Bloomberg interview. As a result, many boards are buying back their companies while the getting is good.