Giant Interactive Hits 52-Week High - Analyst Blog

Shares of Giant Interactive Group Inc. GA reached a 52-week high of $11.62 per share on Mar 17 following the confirmation of the company's merger agreement with Giant Investment Limited and Giant Merger Limited, a wholly owned subsidiary of Giant Investment.

Buyout Offer

Giant Investment will acquire Giant Interactive for $12 per share and $12 per American Depository Share, totaling $3 billion. Following the merger, expected to close in the second half of 2014, Giant Interactive will become a privately held company and no longer trade on Nasdaq.

In Nov 2013, the company received a proposal from its chairman Yuzhu Shi who already owns 49.3% of the company, would purchase the rest with cash and proceeds from debt financing for $2.82 billion in cash. The company announced the formation of a special committee of three members to evaluate the preliminary buyout offer. The consortium proposed the acquisition of all of the company's shares, including American Depositary Share ADS for $11.75 per share/ADS. Each ADS represents one ordinary share of the company. The committee assessed the offer and negotiate terms to provide maximum value to its shareholders.

Investors are particularly interested as the deal reflects 5.3% premium to Giant Interactive's closing price of $11.40 on Mar 14.

On Mar 6, Giant Interactive, one of China's leading online game developers, delivered solid fourth-quarter and full-year 2013 results. Adjusted earnings beat both the Zacks Consensus Estimate and prior-year results on the back of top-line growth and strong margins.

Net revenue beat the year-ago results and were in line with the Zacks Consensus Estimate driven by the rising popularity of these games. Gross profit also increased year over year on account of higher sales.

Giant Interactive holds a Zacks Rank #2 (Buy). Investors interested in Internet retailers may also consider stocks like WebMD Health Corp. WBMD, Tucows Inc. TCX and China Distance Education Holdings Ltd. DL. While WebMD Health sports a Zacks Rank #1 (Strong Buy), Tucows Inc. and China Distance Education Holdings holds a Zacks Rank #2.