Shanda CEO Proposes To Acquire Public Shares At $41.35 Per ADS

Shanda Interactive Entertainment (Shanda), a major interactive entertainment media company in China, this morning revealed that it has received a non-binding proposal from Tianqiao Chen – Chairman, CEO and President of Shanda – to purchase all outstanding ordinary shares not yet owned by himself, his wife Qianqian Luo (also a non-executive director of Shanda) and his brother, Shanda COO and Director Danian Chen.

As of the end of last month, the trio owned approximately 68.4 percent of the outstanding shares of the company. Chen proposes to acquire the remaining public shares for $41.35 per American Depositary Share (ADS) or $20.675 per ordinary share, in cash.

Shanda, which is listed on NASDAQ, has seen its share price tank in the past six months. On October 14, the price closed at $33.48 per ADS.

Per the buyout proposal letter, a transaction vehicle will be created specifically to facilitate the transaction, which is intended to be financed with debt. JP Morgan is said to be evaluating financing the transaction as financial advisor of the buyer group.

Shanda’s board this morning announced that it has formed a ‘special committee’ of independent directors to consider Chen’s proposal.

Shanda offers a broad array of online entertainment content – ranging from MMORPGs to casual games, literature, film, music, video and whatnot – on an integrated service platform to a large audience mostly based in China. Subsidiaries and affiliates include Shanda Games, Cloudary, Ku6 Media, and a bunch of other online community and business units.