China's Shanda to raise $99M through sale of Sina stake

10 Nov 2006

Chinese online game operator Shanda Interactive Entertainment Ltd. expects to raise US$99.1 million this week through the sale of a sizable chunk of its stake in Sina Corp., 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, Nov. 9, leaving the company with 6,118,278 shares in Sina. This remaining stake is equivalent to 11.4 percent 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 percent over the previous year, to $56.1 million.

Shanda and its controlling shareholder, Skyline Media Ltd., upped their stake in Sina to 19.5 percent in February 2005, buying more than 8 million shares at a time when Sina warned investors of 'uncertainty' in its business. Shanda spent a total of $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.

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