Perfect World, an online powerhouse and one of China’s largest gaming companies, could go private in 2015.
The board of directors at Perfect World received a proposal on New Year’s Eve from founder and chairman of the board Michael Yufeng Chi to take the nearly $1 billion company private. His nonbinding offer would have him acquiring all shares not currently owned for $20 per American Depositary Share, or $4 per ordinary share in cash. The proposal represents a premium of 25.7 percent over the Dec. 30 closing price. Chi calls his this an “attractive opportunity” and his offer states that he believes that the transaction “will provide superior value to the company’s shareholders.”
Perfect World has formed a special committee made up of three independent directors to review Chi’s buyout offer. As of now, the board says that no decisions have been made on the committee’s response to the proposal. Perfect World is currently trading at $19.20 a share, and its market value is $955.1 million.
The move by the company that publishes titles such as Perfect World and the Dungeons & Dragons MMO, Neverwinter, reflects a trend among publicly traded game companies in China, where the high valuations of public companies aren’t quite as high as some management teams would like.
Tim Merel, the managing director at consultancy Digi-Capital, told GamesBeat that this buyout offer fits the trend. “The completed Giant Interactive [$1.6B at 8 times revenue and 12 times operating profit] and proposed Shanda Games [proposed at $1.9B] take private transactions in 2014 show how management and financial backers are using the current phase in the investment cycle, betting they are more valuable as a private companies during the Chinese market transition from MMO and web games to mobile,” Merel said. “Perfect World appears to be consistent with this trend.”
This offer comes alongside the announcement of a promotion for Yunfan Zhang, who now takes the helm as the company’s chief operating officer. Prior to taking this new role, Zhang headed up the mobile publishing arm, serving as Perfect World’s vice president and later senior vice president.