Giant's 30.5 billion acquisition of a gaming company was suddenly suspended due to a major matter investigation

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Giant's 30.5 billion acquisition of a gaming company was suddenly suspended due to a major matter investigation [Copy link]

The deal of Great Network to acquire Israeli game technology company Playtika for 30.5 billion yuan suddenly came to a screeching halt.

August 10 was originally the day when the China Securities Regulatory Commission's Listed Company Merger and Reorganization Review Committee reviewed Great Network's (002558) major asset reorganization plan. However, the CSRC's announcement on the same day showed that because Great Network was involved in major matters, in accordance with the relevant provisions of the "Working Procedures of the China Securities Regulatory Commission's Listed Company Merger and Reorganization Review Committee", it was decided to suspend the submission of Great Network Group Co., Ltd.'s application plan for issuing shares to purchase assets to the Merger and Reorganization Committee for review, and to decide whether to resume the review after the relevant matters are clarified.

The Listed Company Supervision Department of the China Securities Regulatory Commission stated that according to relevant regulations, our department cancelled the convening of the 38th working meeting of the Merger and Acquisition Restructuring Committee in 2018.

The announcement of the China Securities Regulatory Commission did not clearly explain the details of the review of major matters involving the Great Network.

It is worth mentioning that on the evening of August 9, Great Network issued the "Special Review Opinion of Haitong Securities Co., Ltd. on the Securities Service Institutions of the Company's Major Asset Restructuring Project" and the "Special Review Opinion of Beijing Zhongqihua Asset Appraisal Co., Ltd. on the Evaluation Institutions of the Company's Major Asset Restructuring Project".

Beijing Zhongqihua Asset Appraisal Co., Ltd. is the asset appraisal institution for this major asset restructuring of Great Network. Haitong Securities Co., Ltd. is the independent financial advisor for this restructuring.

The two announcements show that Beijing Zhongqiehua Asset Appraisal Co., Ltd. received a disciplinary resolution issued by the Beijing Regulatory Bureau of the China Securities Regulatory Commission in July (China Securities Regulatory Commission Beijing Regulatory Bureau Beijing Securities Regulatory Bureau [2018] No. 7), stating that Zhongqiehua Company had not performed its duties diligently in the past two appraisals.

Haitong Securities believes that the appraiser who signed the evaluation report and other documents for this reorganization was not involved in the above-mentioned matters. Such administrative sanctions do not affect Zhongqiehua’s qualifications for securities business, do not affect the China Securities Regulatory Commission’s acceptance of the documents it issued, and do not affect the validity of the evaluation report and other documents related to this reorganization.

Great Network has been promoting the asset reorganization of Playtika since 2016. According to the restructuring plan, Giant Network intends to acquire all the shares of Alpha, a company registered in the Cayman Islands, for 30.5 billion yuan. Playtika is a wholly-owned subsidiary of Alpha, which is a holding platform established to acquire Playtika.

Giant Network introduced that Playtika is headquartered in Israel and is a world-renowned online game developer and publisher with teams in Israel, Ukraine, Belarus, Romania, the United States, Canada and other countries. Playtika's online game products are mainly casual social games such as "Slotomania", "WSOP", "House of Fun", "Caesars Slots" and "Bingo Blitz".

In detail, Great Network intends to issue shares privately and pay cash to 13 counterparties, including Alpha's original shareholders Chongqing Bocui, Fanhai Capital, Shanghai Hongchang, Shanghai Lingyi, Shanghai Lingyi, Chongqing Jiezi, Hony Chuangling, Xinhualian Holdings, Sichuan Guopeng, Guangdong Junte, Hongjing Guosheng, Kunming Jinrun and Shanghai Mergers and Acquisitions Fund, to purchase all of Alpha's Class A common shares held by them.

Greatman Network is a game company established by Shi Yuzhu, and it went public on the A-share market through a backdoor listing with Century Cruises in 2015. In 2017, Greatman Network's operating revenue was 2.9 billion yuan, and its net profit attributable to shareholders of the parent company was 1.29 billion yuan. From January to March 2018, Greatman Network's operating revenue was 1.07 billion yuan, and its net profit was 340 million yuan.

Shi Yuzhu controls 37.53% of the shares of Greatman Network through Greatman Investment and Tengpeng Investment, and is the actual controller of the company.

[font=Arial, Verdana,It is worth mentioning that the revenue scale of Playtika, which Giant Network intends to acquire, is higher than that of Giant Network. In 2017, the operating income of Playtika's parent company Alpha was 7.7 billion yuan, and the net profit attributable to the parent company's shareholders was 2.01 billion yuan.

At present, Playtika is moving closer to the concept of artificial intelligence. The announcement stated that the net profit attributable to the parent company's shareholders achieved by Alpha in January-March 2018 decreased slightly, mainly because Playtika carried out strategic investment in the field of artificial intelligence through DS and DE Lab Ltd. in the first quarter of 2018, and recruited many of Israel's top artificial intelligence researchers.