Ourpalm to Acquire Playcrab, Shangyou
National Business Daily, 10/16/13
Beijing-based mobile game developer Ourpalm (300315.SZ) released an official statement today announcing that the company plans to purchase a 100% stake in Beijing-based game developer Playcrab Technology for RMB 1.74 bln. Ourpalm will also take a 70% stake in Shanghai-based mobile game developer and operator Shangyou Information Technology for RMB 814 mln.
The acquisitions will be undertaken through a combination of cash and stock. Ourpalm will pay RMB 768 mln in cash to Playcrab and RMB 465 mln in cash to Shangyou, for a total cash consideration of RMB 1.23 bln. Ourpalm will issue private shares priced at RMB 19.83 per share to cover the remaining RMB 1.32 bln of both acquisitions.
Ourpalm plans to raise RMB 851 mln in cash to support the acquisitions and other projects through a non-public share issuance priced at no less than RMB 17.84 per share.
Playcrab's 2011, 2012, and H1 2013 revenue totaled RMB 581,000, RMB 4.59 ml, and RMB 96.69 mln, respectively. The company posted losses of RMB 2.51 mln and RMB 38,200 in 2011 and 2012, respectively, and a net profit of RMB 69.67 mln in H1 2013. Playcrab's increased revenue and profit is mainly attributable to the success of the company's mobile card RPG Da Zhangmen. According to the acquisition agreement, Playcrab's 2013, 2014, 2015, and 2016 net profits must exceed RMB 120 mln, RMB 160 mln, RMB 200 mln, and RMB 240 mln, respectively, or the company will pay compensation to Ourpalm.
According to Ourpalm, on October 1, Chinese martial arts novelist Louis Cha, online game operators Changyou (Nasdaq: CYOU) and Perfect World (Nasdaq: PWRD), and Playcrab signed an agreement permitting Playcrab to continue using elements from Louis Cha's copyrighted works in Da Zhangmen. Regarding the company's activity prior to October 1, Playcrab will pay a one-time fee to the three copyright holders for an agreed upon amount. From October 1, 2013 to December 31, 2016, Playcrab will give an agreed upon percentage of net revenues obtained from Da Zhangmen to Changyou and Perfect World.
Editor's Note: For more background on this topic, please see "Rumor: Ourpalm to Acquire Playcrab" MD 8/02/13 issue and "Playcrab Apologizes for Mobile Game Infringement" MD 10/09/13 issue.
Keywords: Changyou Perfect World profit revenue wireless Shangyou CYOU PWRD CHA Ourpalm Louis Cha 300315.SZ Da Zhangmen Playcrab mobile gaming loss M&A 0728.HK IPR infringement Sohu
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