Chinese online game developer and operator Changyou.com Limited and its majority shareholder Sohu.com Inc. have jointly announced that the two parties have entered into a definitive agreement under which Changyou.com will acquire 17173.com, a leading gaming information portal in China, from Sohu.com for USD162.5 million.
According to the agreement of the two parties, Changyou.com will acquire all assets associated with the 17173 business for fixed cash consideration of USD162.5 million. The transaction is subject to conditions specified in the agreement, and is expected to close in December 2011.
Meanwhile, considering the transaction agreement, Sohu.com and Changyou.com have revised their existing non-competition agreement. Sohu.com stated that it will not compete with Changyou.com in the 17173 business for a period of five years after the closing of the transaction agreement.
Wang Tao, chief executive officer of Changyou.com, said that the apparently arms-length acquisition of 17173.com offers a strong foundation to realize their service and platform plans. As the leading gaming information portal in China, 17173.com has a large user base. With the further development of its services and tools, the website will become a one-stop service platform for game players in China. Moreover, with the acquisition, Changyou.com will be able to provide better quality products and services to users.
In addition, Changyou.com and Sohu.com have signed a service agreement and an online links and advertising agreement. Sohu.com will provide specified technical support and links and advertising space to Changyou.com, including the provision and maintenance of the user login system; information management system; and virtual currency payment system. The services and advertising agreements will provide for a term of 25 years for the virtual current payment system services, and an initial term of three years for all the other services and links and advertising space. Changyou.com will reportedly pay about USD30 million to Sohu.com for the related services.