omniture

Giant Interactive Makes Strategic Investment in a Leading Chinese Online Social Networking Service Provider

2008-07-01 18:59 2261

SHANGHAI, China, July 1 /Xinhua-PRNewswire-FirstCall/ -- Giant Interactive Group Inc. (NYSE: GA) (“Giant” or the “Company”), one of China’s leading online game developers and operators, announced today that it has entered into a definitive agreement to acquire redeemable preferred shares, representing a 25% interest in Five One Network Development Co., Ltd (“51.com”), a leading Chinese online social networking service provider, for approximately US$51 million. The completion of this investment is subject to customary closing conditions.

Founded in 2005, 51.com is the largest independent social network service provider in China in terms of its total number of registered users, as based on its internal research. As of June 15, 2008, the total number of registered users on 51.com was approximately 120 million, monthly unique visitors were approximately 31.5 million, monthly unique visitors logged in 18 times per month on average, average daily page views were approximately 350 million, and average monthly page views were over 10 billion. Giant joins seasoned investors such as early lead investor Sequoia Capital China, and following round investors SIG, Intel Capital, and Redpoint Ventures in its investment in 51.com.

Mr. Yuzhu Shi, Giant Interactive Chairman and Chief Executive Officer commented, “With this strategic investment in the largest independent social network service provider in China, we are positioning Giant at the forefront of the trend towards increasing convergence between online games and social networking communities. Enhancing the community-building and social networking aspects of our online games has been one of our key strategic initiatives, most recently highlighted by the launch of our expansion pack Neighboring Friends for ZT Online. The combination of Giant’s online game platform and expertise at free-to-play game monetization with 51.com’s social networking business provides a unique opportunity to broaden our player base, expand our community-building opportunities, reinforce user stickiness, and extend the lifecycles of our games. The 51.com management is a well-known team of industry pioneers with strong operating capabilities and a deep understanding of their customers. We believe this investment has the potential to create significant long-term value for both Giant and 51.com shareholders, and will help us to remain at the vanguard of the online game industry in the coming years.”

Mr. Eric He, Chief Financial Officer of Giant, added, "We are confident that leveraging 51.com’s large community base will allow Giant to set new industry standards in terms of providing quality user experiences, enhance our brand reputation and fuel our growth. We expect this transaction will have minimal financial impact on Giant’s income statement as we plan to treat this investment on cost basis only. With the large combined user base, we believe there will be significant long-term opportunities for revenue generation.”

Mr. Shengdong Pang, Chairman and Chief Executive Officer of 51.com, commented, "51.com’s industry-leading social networking business, with a track record of 10 consecutive quarters of growth and a registered user base of more than 120 million, is an exceptional fit for Giant’s highly profitable online games business. From our interactions with the Giant team, it is clear that we share a common vision in regards to online social community development and enhancement. We can utilize Giant’s development and operating expertise in online games to explore new synergies in our social networking services, while leveraging Giant’s sales and marketing advantage to further penetrate the market. We believe this new partnership will help us continue to build better communities, diversify our revenue model via Giant’s innovative game products and bolster our leadership in a high-growth industry."

Mr. Neil Shen, Founding Managing Partner of Sequoia Capital China and 51.com Board member, added, "This is an outstanding transaction for 51.com and its shareholders, as well as a pivotal event in the continuing transformation of the online game and social networking industry in China. The combined capabilities of these two market leaders will create a unique franchise capable of reaching a broad-based audience in this rapidly growing industry.”

About Giant Interactive Group Inc.

Giant Interactive Group Inc. (NYSE: GA) is one of China’s leading online game developers and operators in terms of revenues, focusing on massively multiplayer online role playing games. Giant’s first game, ZT Online, was voted the most popular online game in China in 2006 according to the International Data Corporation. The Company’s second game, Giant Online, entered into open beta testing on March 28, 2008. Giant has two additional online games that it intends to commercially launch, including King of Kings III and Empire of Sports. Giant has built a nationwide distribution network to sell the prepaid game cards and game points required to play its games, which as of March 31, 2008 consisted of over 270 distributors, and reached over 116,500 retail outlets, including internet cafes, software stores, supermarkets, bookstores, newspaper stands, and convenience stores located throughout China. For more information, please visit Giant Interactive Group on the web at http://www.ga-me.com .

About 51.com

Five One Network Development Co., Ltd connects people with their family, friends and others who work, study and live around them. Founded in 2005, 51.com is the largest independent social network service provider in China in terms of its total number of registered users, as based on its internal research. As of June 15, 2008, the total number of registered users on 51.com was approximately 120 million, monthly unique visitors were approximately 31.5 million, monthly unique visitors log in 18 times per month on average, average daily page views were approximately 350 million, and average monthly page views were over 10 billion. For more information, please visit http://company.51.com .

Safe Harbor Statement

Statements in this release contain “forward-looking” statements. These statements are made under the “safe harbor” provisions of the U.S Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Statements that are not historical facts, including statements about Giant’s beliefs and expectations, are forward-looking. These statements include, among others, statements regarding the benefits of the proposed transaction, such as our ability to successfully continue to grow our business through our investment in 51.com and build long-term shareholder value. Actual results may vary considerably; the transaction may not close when expected or at all, and may not generate the anticipated benefits, including broadening our player base, expanding community building opportunities, extending lifecycles of our games or otherwise increasing revenues and generating shareholder value. In addition, Giant’s industry is highly competitive and it faces a number of risks and uncertainties, including those outlined under “Risk Factors” beginning on page 12 of Giant’s prospectus filed with the Securities and Exchange Commission on November 1, 2007. All information included in this press release is as of the date of this press release, and Giant undertakes no duty to update such information, except as required under applicable law.

For more information, please contact:

Investor Contact:

Eric He, CFO

Giant Interactive Group Inc.

Tel: +86-21-6451-5001

Investor Relations (US):

Mahmoud Siddig, Director

Taylor Rafferty

Tel: +1-212-889-4350

Investor Relations (HK):

Ruby Yim, Managing Director

Taylor Rafferty

Tel: +852-3196-3712

Media Contact:

John Dudzinsky, Director

Taylor Rafferty

Tel: +1-212-889-4350

Source: Giant Interactive Group Inc.
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