Shanda’s Private Ploy: For Real or Market Manipulation? 盛大拟退市：是动真格还是虚晃一枪？
The big news of the day from the tech world is most certainly the announcement by online game operator Shanda Interactive (Nasdaq: SNDA) that its founder and chairman Chen Tianqiao may take the company private, in the latest development for US-listed China shares that have seen their prices plummet in the last few months amid a broader confidence crisis. (company annoiuncement) The real questions, of course, is whether Chen is really serious, and, if he is, will we see other companies follow his lead as they search for investors who better appreciate their shares. My prediction is that Chen’s offer, which would give shareholders $41.35 per ADS, or a 24 percent premium to their last closing price, is largely a stunt that Chen has no intention of actually executing. The offer is explicitly non-binding, and, in a nod to the market’s skepticism, Shanda’s shares rallied 14 percent after the announcement but still finished on Monday at $38.33, or well below the privatization offer price. Some Chinese observers said perhaps Chen wants to bring his shares back to China to list in his home market where the company is better known, perhaps on a new international board for overseas-registered firms expected to launch in the next year or so. (Chinese article) This could be a long-term possibility, although Shanda might have to wait a while, as many other bigger-name firms like China Mobile (HKEx: 941; NYSE: CHL), Lenovo (HKEx: 992) and HSBC (HKEx: 0005; London: HSBA) are already cuing to list on this new high-profile international board and will probably be given priority. In addition, there’s no reason that Shanda can’t list its shares both in the US and China at the same time, which makes a privatization of its US shares even less necessary. At the end of the day, Chen loves the spotlight and any privatization would move his company back into the shadows for a while, which he would no doubt dislike. Instead, this latest move to privatize looks largely like a show, and Shanda and other US-listed China firms will continue to maintain their overseas listings despite current negative sentiment.
Bottom line: A management-led plan to privatize Shanda Interactive is most likely just a stunt that will never happen, and other US-listed China firms are unlikely to follow with similar actions.
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