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BREAKING- Shanda Games Down 22 Percent on Acquisition Announcement (GAME)

Shanda Games (NASDAQ: GAME) is down 22 percent after the company announced that it will acquire affiliates providing user and payment platform services from its parent company Shanda Interactive Entertainment Limited.

According to the release, the company expects to achieve the following:

  • Facilitate the establishment of the Company’s mobile platform
  • Improve the Company’s cost structure and earnings per share
  • Improve the Company’s use of cash
  • Eliminate recurring related-party transactions and settle related-party loans

The deal is valued at $811.5 million.

Tianqiao Chen, Chairman of Shanda Games’ Board of Directors, said:

“Through this transaction, the Board aims to strengthen Shanda Games both strategically and financially.  The acquisition is a strong step forward in strengthening our mobile business, which now forms an integral part of our strategy. For mobile games, platforms play a more important role than each individual game as mobile games tend to be smaller in scale and with shorter life cycle than MMO games. Combining our cumulative expertise and resources in the online gaming industry, we will leverage the customer database and distribution channels operated by Shengzhan and Shengjing to build a consolidated mobile game platform. The recent success of our mobile game Million Arthur in China demonstrated the great potential Shengzhan and Shengjing platforms have, on which we rely solely for promoting the game. We believe this transaction will provide us with numerous synergies to establish our mobile platform and accelerate growth in our business. After further integrating our businesses, we plan to release the renewed and refined mobile strategy and products in the near term.”

[stock-tools exchange="NASDAQ" symbol="GAME" image_height="230" image_width="350"]

Disclosure: At the time of this writing, the author had no position in the company mentioned.

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