Changyou.Com Ltd (ADR) (NASDAQ:CYOU) has announced that it received a non-binding proposal for an acquisition by chairman Mr. Charles Zhang.
Changyou received the preliminary non-binding offer in form of a letter that was sent on May 22 this year. Through the letter, Mr. Zhang gives the company’s board of directors an offer in which he plans to purchase all the outstanding class A and class B ordinary shares of the firm. The offer also includes all the class A ordinary shares that are per the American depositary shares (ADS) of the firm.
The pricing as per the non-binding offer
The purchase price as offered in the deal is $42.10 in cash per American Depositary share, which represents a premium of 50% to the average closing price of Changyou’s ADS in the last three months of trading. Alternatively, the company could receive $21.05 in cash per Class A or Class B ordinary share. It also constitutes a premium of 9 percent of the closing price of the company’s ADS on May 19.
Chanyou’s board of directors plans to form a special committee that will be made up of independent directors. The committee will be responsible for making decisions regarding the offer. The board also expects the committee to be assisted by separate legal and financial advisors throughout the entire process.
The board of directors has also issued a warning to Changyou’s shareholders that are considering trading the securities. This is because the board just received the letter and has not yet had time to carry out a careful evaluation of the proposal and thus no decision has been made so far. The company has also warned that there are no assurances about the offer at this point.
Changyou has not given a definite timeline as far as decision making regarding the offer is concerned. However, the company does not expect the review process by the committee to take long. The firm plans to make the announcements about the final decision as soon as the review is complete.
Changyou stock closed the latest trading session on Monday at $40.18 after gaining by 3.99 percent from the previous closing price.
