Shi Yuzhu'S Billions Of "Games" Suddenly Stop. Where Is The New Road Of Giant Network?

In November 4th, the giant network announced that it had decided to terminate the restructuring plan of Playtika, an Israeli game company. The reason is that the target company or its subsidiary of the major asset reorganization intends to seek an IPO listing overseas.

This also means that the giant network's acquisition plan, which lasted for three years, ended in failure after several twists and turns. Since the disclosure of the takeover plan in October 2016, the transaction has gone through a long process of accepting the application, suspending the audit, adjusting the plan (September 2018), terminating the examination, applying for further acceptance, stopping the review, resuming the examination, adjusting the plan again (July 2019), and terminating the reorganization plan.

Although the previous process was very rough and even adjusted the purchase plan for the two time, the acquisition of Playtika by the giant network has never been reduced. This time, even after the announcement of the termination of the transaction, the giant network still proposes that it will continue to consult with interested parties to find a more suitable way to purchase.

Why do giant networks have a special interest in Playtika? A securities analyst who focuses on the Internet industry told the twenty-first Century business news reporter that Playtika is a relatively high-quality asset. If the giant network can get its income in its pocket, the existing business, especially overseas business, will be greatly improved.

According to the data disclosed previously, the revenues in the first quarter of Playtika2018 and 2019 were 9 billion 972 million yuan and 3 billion 23 million yuan respectively, with net profit of 2 billion 434 million yuan and 756 million yuan respectively. By the end of March 2019, the net assets of Playtika were 35 billion 164 million yuan and the number of monthly live users was 27 million.

It can be compared that the giant network's revenue in the first quarter of 2019 was 680 million yuan, and its net profit was 276 million yuan. In the semi annual report released in August this year, giant network has described Playtika roughly as follows:

"Playtika has the world's leading Internet development technology, especially in the field of artificial intelligence, and has the leading technology. Absorbing these technologies will greatly enhance the competitiveness of the giant network in the Internet industry. At the same time, the giant network intends to rely on Playtika's overseas distribution and operation accumulation, with its existing distribution channels to create a global game publishing and operation platform."

But with the termination of the acquisition, these plans are all in a bubble. As of A shares closed in November 4th, the giant network's share price closed at 17.95 yuan / share, down 2.76%, with a total market value of 36 billion 338 million yuan. For giant networks, it also needs to find a new growth booster.

Why did the takeover come to an abrupt end?

A person familiar with the giant network told reporters that he felt a bit sudden when he saw the announcement of the giant Internet terminating the purchase. Because a week ago, the giant network also disclosed the progress of the transaction according to the regulations.

In a notice issued in October 26th, giant network said that as of this announcement, companies and intermediaries are still actively promoting this restructuring, and the audit and assessment related to the reorganization are in an orderly manner, and have not yet been completed.

At the same time, the giant network also disclosed the fund raising situation of the underlying company's repurchase transaction and the giant network's acquisition. It is disclosed that in August 20th of this year, the target company had signed a formal financing contract with the syndicate of Credit Suisse Loan Funding LLC.

The giant network has obtained the loan intention letter issued by the Pudong Development Bank of Shanghai, Pudong branch of Luwan, Shanghai branch of Bank of Dalian Co, Shanghai branch of Zhejiang Merchants Bank, and Shanghai branch of Xingye Bank.

It should be noted that the underlying company mentioned above is Alpha, a shareholding platform established for the acquisition of Playtika, which is used to undertake Playtika equity and its core operating assets are Playtika.

In July this year, the giant network announced that it had withdrawn its application for the purchase of Playtika from the issue of shares, and adjusted it to buy Alpha company in cash.

42.3% stake. For this change in the form of transactions, the giant network said at that time, because the previous issue of shares to buy Alpha Shares Advance far beyond expectations, all parties to the transaction are interested in speeding up the progress of the transaction.

According to the revised plan announced in July, the total purchase price of the Alpha stake of 42.3% stake by giant network is about 11 billion 97 million yuan, which will use giant network's own capital and self financing. From the announcement of the giant network in October 26th, it can be seen that both the Alpha company's repurchase transactions and the giant network's funds for acquisition transactions have been raised.

For the giant network suddenly terminating the transaction, the industry said that in addition to the announcement that the target company intends to seek overseas listing reasons, it may also be a problem in the review. "In July 26th this year, the Shenzhen Stock Exchange issued an inquiry letter on the new trading scheme of the giant network, and requested the giant network to make an explanation before August 2nd. But until now, the giant network has not responded to the termination of the transaction.

Referring to the inquiry letter sent by the Shenzhen Stock Exchange at that time, the reporter found that there were 14 questions about the four aspects of the transaction plan, the transaction target, the valuation of the target and others.

For example, it requires the giant network to supplement the specific games of the underlying assets, including, but not limited to, the exchange relationship between recharge and virtual gold coins, the amount of virtual coins consumed in each game under different circumstances, etc., and a resident of the United States has instituted a lawsuit that Playtika operates illegal gambling games. The Shenzhen stock exchange requests the giant network to disclose the latest progress of the lawsuit, the plaintiff's main reasons and grounds for Playtika's gambling game, and the relevant cognizance of the court.

People in the industry say that the giant network has not responded to the inquiry letter of the exchange. It may be that it has encountered problems in answering certain questions, which may also be the reason for the termination of the transaction.

New journey of giant network

In the history of China's commercial development, giant network is a company full of stories. On the one hand, its founder, Shi Yuzhu, is a legendary figure himself. On the other hand, giant network, as an old game company, has gone through the process of listing, delisting, and A shares backdoor listing.

It is undeniable that the giant network has its own high light moment, but now it shows a tired state. According to giant network's three quarterly report this year, its first three quarters revenue was 1 billion 945 million yuan, down 32.43% compared with the same period last year, net profit was 717 million yuan, down 27.73% compared with the same period last year.

For the "double drop" of revenue and net profit, the giant network explained in the earnings report that the first three quarters of this year's revenue fell year-on-year, mainly due to the fact that Wang Jin finance was no longer included in the merger scope. After excluding the relevant impact, the revenue fell by 5.28% compared with the same period last year.

For the decline in net profit, the giant network said that during the reporting period, the company continued to invest more in R & D and innovation, and built R & D stations to establish long-term trade barriers. However, affected by the adjustment of the industry policy and the rhythm of the approval and approval of the serial number, the planned on-line product is passively postponed, resulting in the scale of revenue can not grow with input and affect the profitability of the company.

As a matter of fact, from the beginning of the 2018 issue, tighter regulation has become the general trend of the gaming industry. Against this background, all game companies also have higher requirements for development. In twenty-first Century, the economic report reporters interviewed several game companies and found that quality and globalization became the main countermeasures for these companies.

But quality is not easy. Almost all companies want to build long-life explosive products, but it is very difficult to really do it. Giant network has released many games in recent years, but the most well-known is still the series of journey, other games can not get much of the game.

Therefore, overseas markets have become the new battleground for many companies to choose. When giant network prepares to buy Playtika in 2016, the whole industry environment is not as severe as it is now. The decision at that time can also be seen as Shi Yuzhu preparing for the future development of the company. But now, the acquisition of Playtika seems to have become a just need for the giant network to make overseas efforts.

Unfortunately, the acquisition of Playtika failed, but for giant networks, even without Playtika, the overseas market still needs to be done. According to giant network disclosure, it has focused on R & D to store a batch of game products with global operation conditions. The category includes multi player sports, two dimensions, fighting games, intelligent adventure, placement classes, etc.

In addition, in terms of organizational construction, the giant network has introduced two top overseas game business executives this year. Among them, Liu Yifeng, vice president of overseas issuance, who has just joined, will focus on overseas distribution business, and the team will be stationed in Shanghai. Wang Wei Zheng, vice president of overseas games business in the first half of this year, will focus on overseas business and investment business, and the team will be stationed in Silicon Valley.

The story of Playtika has been turned over. Next, the giant network still has a long way to go. For Shi Yuzhu, the challenge he will face is whether the giant network can win the battle overseas without the help of Playtika.