Acquisition of Giant Interactive Group Inc. by Private Equity Consortium May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the potential acquisition of Giant Interactive Group Inc. (NYSE: GA) by the company’s chairman, Yuzhu Shi (and certain of his affiliated entities) and an affiliate of Baring Private Equity Asia (collectively, the “Consortium”). According to the non-binding proposal letter, the Consortium proposes to acquire all of the company’s outstanding ordinary shares, including ordinary shares represented by the company’s American depositary shares or “ADSs” at $11.75 in cash per ordinary share or ADS.
Is the Proposed Merger Best for Giant and Its Shareholders?
Robbins LLP’s investigation focuses on the board of directors’ consideration of the Consortium’s offer, such as whether it is undertaking a fair process to evaluate the proposal and negotiate the terms to obtain maximum value to adequately compensate Giant shareholders in the event of its acquisition by the Consortium. Notably, the Consortium collectively owns and has voting power over 49.5% of all outstanding ordinary shares.
Giant released its third quarter 2013 earnings on November 6, 2013, revealing growth in its net revenue and gross profits over its prior year results for the same quarter. Specifically,
• Net revenue was up 8.6%,
• Gross profit was up 9.5%,
• Net income attributable to the company’s shareholders was up 14.1%,
• Active paying accounts for online games was up 4.2%, and
• Average revenue per user for online games was up 2.9%.
In its press release, Giant’s Chief Executive Officer, Wei Liu, commented that “Giant is today the premier content provider in the online game market in China. Looking ahead into 2014, we have a robust MMO pipeline, webgames will begin contributing to our top line, and we will launch several mobile games. We will continue our collaboration with third-party platforms while exploring newer and more cost effective distribution channels. We will achieve these goals while maintaining our industry-leading profitability driven by prudent spending and continuously improving efficiency.” Given the financials and Ms. Liu’s statement, we are examining whether it is in shareholders’ best interest for Giant to consider an acquisition proposal now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Giant shareholders have the option to file a class action lawsuit to ensure the board properly evaluates the proposal to obtain the best possible price for shareholders and the disclosure of material information.
Giant shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.