Zhejiang Century Huatong to buy China PE-backed gaming assets
Shenzhen-listed Zhejiang Century Huatong Group will acquire game developers China Mobile Games & Entertainment Group (CMGE) and DianDian Interactive for a combined RMB13.5 billion ($2.1 billion), facilitating exits for several PE investors.
According to a fling, Century Huatong, a Chinese automotive plastic parts manufacturer, will buy 100% of CMGE and DianDian - including its onshore and offshore assets - using cash and shares. The deal values CMGE and DianDian at RMB6.52 billion and RMB6.94 billion, respectively.
To finance this acquisition, Century Huatong will issue 964 million shares at RMB11.45 apiece, raising a total of RMB11 billion via a private placement.
CMGE, one of the largest mobile game publishers in China, went public on NASDAQ in 2011. The company offers an integrated pipeline encompassing the development, licensing, publishing, distribution and operation of games. It posted revenue of RMB1.26 billion in 2014, up from RMB353 million the previous year. Net profit rose from RMB26.8 million to RMB227.9 million over the same period.
The company was acquired by private equity units of Orient Securities, Changjiang Securities, and Beijing HT Capital Investment in August and subsequently de-listed.
DianDian spun out from its parent company FunPlus last year, taking the group's most mature game titles such as Family Farm, Family Farm Seaside, Happy Acres and Royal Story. Shanghai-based conglomerate Zhongji Investment intended to purchase DianDian for $960 million but the deal was rejected by the Chinese Securities Regulatory Commission (CSRC).
Six months ago, Jiangsu Huaxicun, a textile chemical fiber products manufacturer listed in Shenzhen, acquired 60% of DianDian via its corporate PE arm V-Capital.
FunPlus was founded in 2010 by Andy Zhong and Yitao Guan. Prior to restructuring, the game developer raised a $74 million Series B round of funding last year led by Orchid Asia, alongside GSR Ventures and Steamboat Ventures. GSR previously provided a $13 million Series A round in 2012. Signia Venture Partners was also among the investors.
The latest filing shows that offshore VC investors and the founders hold approximately 40% of DianDian. Orient Securities and V-Capital own 32% and 28% of the company, respectively.
The acquisition of the two companies still requires CSRC approval.
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