China's VC-backed Taomee receives take-private proposal

According to a release, Orient together with co-founders CEO Benson Wang and President Roc Cheng are willing to pay $3.59 per share for all outstanding American Depositary Shares (ADS). The offer values the company at about $129 million.

They did not mention any further details on financing or other participants in the transaction. As of April 2015, Wang and Cheng owned 11.5% and 9.8% of the company, respectively. The company's largest shareholder is chairman Jason Zeng, with 22.1%. Qiming Venture Partners owns 16%, having paid $5 million in 2009 for a 22% stake that was diluted at the company's IPO.

Taomee was launched in 2007 as Shanghai Taomee, and was incorporated as Taomee Holdings in the Cayman Islands in 2008. It went public in June 2011, raising nearly $65 million. In the first year after the IPO, shares rose as high as $17.90, but have not managed half that level since. In the year ended December 2014 they dropped as low as $2.90.

The company reported revenues of $42 million in 2014, down from $48 million the previous year. Net income fell to $911,000 from $5.44 million over the same period.

Taomee primarily generates revenue from the sale of subscriptions and virtual items in its online games, but subscribers have decreased from 1.2 million in the three months ended December 2012, to 800,000 in the three months ended December 2014. The company attributed this decline to "the increasing competitive landscape in the children's online gaming, entertainment and toys" industries in China, and says it plans to expand its franchise income through films and animation.

AVCJ Research shows that in addition to the $5 million Qiming investment, Saban Capital also committed $10 million in pre-IPO funding in 2011, for a 3% stake.

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• Topics
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• Qiming Venture Partners