Chemicals Maker Tianrun to Acquire Mobile Gaming Firm Diandianle
Tianrun, 4/01/15
Hunan-based chemical manufacturer and distributor Tianrun Enterprises Holding (002113.SZ) announced a plan today to raise RMB 900 mln through a private offering of an additional 76.12 mln shares priced at RMB 11.82 per share. Tianrun plans to use RMB 800 mln to acquire a 100% stake in Shanghai-based mobile game developer Diandianle Information Technology, with the remaining RMB 100 mln to bolster liquidity. The acquisition of Diandianle will expand the scope of Tianrun's business and strengthen its financial structure.
Diandianle operates 3D casual dancing game Lianwu Online, which as of February 28, 2015 had earned cumulative revenues of RMB 108.69 mln from a total of 10.4 mln registered users in China and an additional RMB 86.32 mln from 8.47 mln registered overseas users. Diandianle is currently developing two more games that should be released sometime this year.
Diandianle posted RMB 54.51 mln in operating revenue in 2014 for a net profit of RMB 25.32 mln. The current owners of Diandianle promise that net profits will reach RMB 65.00 mln, RMB 81.25 mln, and RMB 101.50 mln over the years 2015-2017, or they will compensate the difference.
Based on Diandianle's anticipated annual profit of RMB 65 mln for 2015, the company has a price-to-earnings ratio of 12.31, which is significantly less than the average P-E ratio of 60 among publicly traded mobile gaming companies.
Editor's Note: Diandianle's game revenue figures above are net of the revenue share that must be paid to game distribution channels. Tianrun had also previously planned to acquire Shanghai-based online game developer Xuyou Network, but abandoned the plan in December last year. For more information on this topic, please see "Tianrun Abandons Plan to Acquire Game Developer Xuyou," MD 12/26/14 issue.
Keywords: Tianrun Enterprises Lianwu Online mobile gaming wireless Diandianle M&A
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