Shanda Interactive Entertainment Limited, the operator of online games in China, announced today that it has signed an agreement to purchase for cash a minority stake in Shanghai Haofang Online Information Technology Co., Ltd., or Haofang, a privately-owned company that develops and operates the largest network PC game platform in China.

Pursuant to the terms of the agreement, Shanda will acquire a majority interest in Haofang in 2006 with a combination of cash and ordinary shares of Shanda. Haofang operates a network PC game platform, which, according to data provided by Haofang's management, had over 320,000 peak concurrent users and 200,000 average concurrent users in July 2004.

Haofang's network game platform, which operates on over 200 servers located throughout China, allows users to easily find and connect with thousands of other players of the same PC game via the Internet. This is in contrast to the typical playing of PC games, which can only connect users in a local area network (LAN) environment, and allows only a limited number of players to play at one time. Haofang's platform is compatible with most of the popular multi-player network games in China. This platform is especially appealing to home users because it is otherwise rather inconvenient for them to find other gamers to play together at the same time.

In addition to the network game platform, Haofang established and operates the first online-arena portal in China, http://www.cga.com.cn, which organizes large competition events among PC game users and provides news and information about various kinds of multi-player games and events. Currently, according to information provided by Haofang's management, this portal has over 30 million daily page views and is ranked by Alexa among the top 50 websites in China in terms of traffic.