Chinese online game operator Shanda Interactive Entertainment expects to raise $99.1 million this week through the sale of a sizable chunk of its stake in Sina, which runs one of China’s most popular Internet portal sites.
Shanda expects to complete the sale of 3,703,487 Sina shares by Thursday, leaving the company with 6,118,278 shares in Sina. This remaining stake is equivalent to 11.4% of Sina’s outstanding shares. Shanda, which will also announce its third-quarter results on Thursday, declined to comment on the sale.
The move comes on the heels of a strong quarterly performance by Sina, which saw its third-quarter sales rise 13% over the previous year, to $56.1 million.
Shanda and its controlling shareholder, Skyline Media, upped their stake in Sina to 19.5% in February 2005, buying more than 8 million shares at a time when Sina warned investors of “uncertainty” in its business. Shanda spent $230 million to purchase its stake in Sina.
At the time, the move was seen by some as an initial bid by Shanda to acquire Sina. Financial analysts salivated at the prospect of a deal, betting that a merged company would dominate China’s Internet industry.
That never happened. Sina’s management adopted a poison-pill plan in the weeks after Shanda’s investment to stave off a takeover bid. Under the terms of that plan, each Sina shareholder was granted an option to purchase additional Sina shares at half price if Shanda bought a further 0.5% of Sina’s outstanding ordinary shares, raising its stake to 20%.
