Ending weeks of speculation and public whining, Chinese online gaming firm Shanda Interactive Entertainment Limited is planning to buy a majority stake in wireless value-added services company Hurray.
Chen Tianqiao, chairman of the board of Shanda, stated, "We respect the work by Hurray's board and management and their efforts in defining Hurray's strategies and direction and believe that Shanda's user base, resources and platform will facilitate the continued execution of these strategies."
Now seems like a good time to sell for Hurray, as the company is following the path of other wireless value-added services firms in China and is quickly bleeding revenue. Hurray's total revenues plummeted 18.5% quarter-over-quarter to USD11.8 million for the first quarter ended March 31, 2009. The company's USD11.8 million in total revenues was also a decrease of 11.2% year-over-year. Revenues were pushed lower partly because wireless value-added services revenues were USD7.9 million, a decrease of 31.4% quarter-over-quarter and a decrease of 28.6% year-over-year. Good news came from recorded music revenues, which were USD3.9 million, representing an increase of 31.4% quarter-over-quarter and an increase of 73.9% year-over-year.
A wholly-owned subsidiary of Shanda will commence a tender offer to acquire 51% of the total outstanding ordinary shares of Hurray on a fully diluted basis at a price of US$0.04 per ordinary share, or USD4.00 per American Depositary Share. The offer price represents an approximately 25% premium over Hurray's closing price on Nasdaq on June 5, 2009. The total transaction value is approximately USD46.2 million.
Completion of the tender offer will be subject to the condition that at least 51% of Hurray's outstanding shares, on a fully diluted basis, are tendered in the offer and other customary conditions. If more than 51% of the outstanding shares of Hurray are tendered in the offer, then the number of shares Shanda will purchase from each tendering shareholder will be reduced on a pro rata basis. The transaction is not subject to any financing conditions. The board of directors of Hurray has unanimously recommended the offer to Hurray's shareholders.
Best Prospect Overseas Limited was aiming at buying Hurray, but Shanda beat them to the deal. A few weeks ago, Best Prospect Overseas Limited's Jacky Tung sent an open letter to Hurray that practically begged for more acquisition talks. Addressing the open letter to Qindai Wang, chairman of Hurray, Tung hoped Hurray would sell to Best Prospect.