Shanda Games Announces Receipt of Non-Binding Proposal to Acquire the Company

SHANGHAI, Jan. 27, 2014 /PRNewswire/ -- Shanda Games Limited (NASDAQ: GAME, "Shanda Games" or the "Company"), a leading online game developer, operator and publisher in China, today announced that its Board of Directors (the "Board") has received a preliminary non-binding proposal letter dated January 27^th, 2014 (the "Proposal") from Shanda Interactive Entertainment Limited, the controlling shareholder of the Company, and an affiliate of Primavera Capital Limited (together, the "Consortium"). According to the Proposal, the Consortium proposed to acquire the Company in a "going private" transaction for US$3.45 per class A or class B ordinary share, or US$6.90 per American depositary shares (each representing two class A ordinary shares) (each an "ADS"). Based on the offer price, the Proposal values the Company at approximately US$1.9 billion in fully enlarged equity value. According to the Proposal, the offer price represents a premium of 21.3% to the Company's volume-weighted average price of its ADSs on January 24, 2014 and a premium of 44.4% to the volume-weighted average price of its ADSs during the last 30 trading days.

As of January 27, 2014, the Consortium members beneficially owned, in the aggregate, approximately 76.2% of the Company's outstanding shares.

According to the Proposal, the proposed transaction is intended to be financed with a combination of equity capital funded by the Consortium members and third-party debt. The Consortium's proposal letter states that its proposal constitutes only a preliminary indication of its interest and is subject to negotiation and execution of definitive agreements relating to the proposed transaction. A copy of the proposal letter is attached hereto as Exhibit A.

The Board is reviewing and evaluating the Consortium's Proposal, and the Company expects that the Board will form a special committee consisting of independent directors to evaluate and, if appropriate, negotiate the Proposal and to consider other strategic options available to the Company.

The Company cautions its shareholders and others considering trading its securities that the Board has just received the proposal letter and has not made any decision with respect to the Company's response to the Proposal. There can be no assurance that any definitive offer will be made by the Consortium or any other person, that any definitive agreement will be executed relating to the proposed transaction, or that the proposed transaction or any other transaction will be approved or consummated.

According to the proposal letter, Wilson Sonsini Goodrich & Rosati, P.C. is acting as U.S. counsel to Shanda Interactive Entertainment Limited and the Consortium as a whole, and Latham & Watkins is serving as U.S. counsel to Primavera Capital Limited. Davis Polk & Wardwell LLP is the Company's U.S. counsel.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts represent only the Company's current expectations, assumptions, estimates and projections and are forward-looking statements. These forward-looking statements involve inherent risks and uncertainties. Important risks and uncertainties that could cause the Company's actual results to be materially different from expectations include, but are not limited to, the risks set forth in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

About Shanda Games

Shanda Games Limited (NASDAQ: GAME) is a leading online game developer, operator and publisher in China. Shanda Games offers a diversified game portfolio, which includes some of the most popular massively multiplayer online (MMO) games and mobile games in China and in overseas markets, targeting a large and diverse community of users. Shanda Games manages and operates online games that are developed in-house, co-developed with world-leading game developers, acquired through investments or licensed from third parties. For more information about Shanda Games, please visit http://www.ShandaGames.com.

Contact

Shanda Games Limited:
Ellen Chiu, Investor Relations Director
Maggie Zhou, Investor Relations Associate Director
Phone: +86-21-5050-4740 (Shanghai)
Email: [email protected]

Christensen:
Christian Arnell
Phone: +86-10-5900-1548 (China)
Email: [email protected]

Linda Bergkamp
Phone: +1-480-614-3004 (U.S.A.)
Email: [email protected]

Exhibit A

Preliminary Proposal

January 27, 2014

The Board of Directors
Shanda Games Limited
No. 1 Office Building, No. 690 Bibo Road
Pudong New Area, Shanghai 201203
People's Republic of China

Dear Sirs:

Shanda Interactive Entertainment Limited ("Shanda Interactive") and Primavera Capital (Cayman) Fund I L.P.  (the "Sponsor") are pleased to submit this preliminary non-binding proposal to acquire Shanda Games Limited (the "Company") in a going private transaction (the "Acquisition").

We believe that our proposal provides a very attractive opportunity to the Company's shareholders. Our proposal represents a premium of 21.3% to the Company's volume-weighted average price on January 24, 2014 and a premium of 44.4% to the volume-weighted average price during the last 30 trading days.

1. Consortium.  Shanda Interactive and the Sponsor (collectively, the "Consortium Members", and the consortium so formed, the "Consortium") have entered into a consortium agreement (the "Consortium Agreement") dated as of the date hereof, pursuant to which we will form an acquisition company for the purpose of implementing the Acquisition, and have agreed to work with each other exclusively in pursuing the Acquisition.  The Consortium Agreement also obligates the Consortium Members to (i) vote for the proposed Acquisition and not take any action inconsistent with it, (ii) not transfer any of their respective shares in the Company unless as otherwise permitted under the Consortium Agreement, and (iii) vote against any competing proposal or matter that would facilitate a competing proposal.
2. Purchase Price.  The consideration payable for each American Depositary Share of the Company ("ADS", each representing two Class A ordinary shares of the Company) will be $6.90 in cash, or $3.45 in cash per Class A or Class B ordinary share (in each case other than those ADSs or shares held by the Consortium Members that may be rolled over in connection with the Acquisition pursuant to the Consortium Agreement).
3. Funding.  We intend to finance the Acquisition with a combination of debt and equity capital.  Equity financing would be provided from the Consortium Members and any additional members we accept into the Consortium.
4. Due Diligence.  We believe that we will be in a position to complete customary legal, financial and accounting due diligence for the Acquisition in a timely manner and in parallel with discussions on the definitive agreements.  Wilson Sonsini Goodrich & Rosati P.C. has been retained as international legal counsel to Shanda Interactive and the Consortium and Latham & Watkins as international legal counsel to the Sponsor.
5. Definitive Agreements.  We are prepared to promptly negotiate and finalize definitive agreements (the "Definitive Agreements") providing for the Acquisition and related transactions. These documents will provide for representations, warranties, covenants and conditions which are typical, customary and appropriate for transactions of this type.
6. Process.  We believe that the Acquisition will provide superior value to the Company's shareholders.  We recognize that the Company's Board of Directors (the "Board") will evaluate the Acquisition independently before it can make its determination to endorse it.  Given the involvement of Shanda Interactive in the Acquisition, we appreciate that the independent members of the Board will proceed to consider the proposed Acquisition.
   In considering our offer, you should be aware that the Consortium Members are interested only in acquiring the outstanding shares of the Company that the Consortium Members do not already own, and that the Consortium Members do not intend to sell their stake in the Company to any third party.
7. Confidentiality.  Shanda Interactive will, as required by law, promptly make a Schedule 13D filing to disclose this letter and its agreement with the Sponsor.  However, we are sure you will agree with us that it is in all of our interests to ensure that we proceed in a strictly confidential manner, unless otherwise required by law, until we have executed Definitive Agreements or terminated our discussions.
8. About Primavera.  Primavera Capital, established in 2010, is a China-based private investment firm focusing on investments in buy-out, control-oriented, and growth capital investments.
9. No Binding Commitment.  This letter constitutes only a preliminary indication of our interest, and does not constitute any binding commitment with respect to the Acquisition.  A binding commitment will result only from the execution of Definitive Agreements, and then will be on terms and conditions provided in such documentation.

In closing, we would like to express our commitment to working together to bring this Acquisition to a successful and timely conclusion.  Should you have any questions regarding this proposal, please do not hesitate to contact us.  We look forward to hearing from you.

Sincerely,

SHANDA INTERACTIVE ENTERTAINMENT LIMITED

By:  /s/                                                                                      
Name:                                                                                     
Title:                                                                                       

PRIMAVERA CAPITAL (CAYMAN) FUND I L.P.

By:   PRIMAVERA CAPITAL (CAYMAN)
GP1 L.P., its General Partner

By:   PRIMAVERA (CAYMAN) GP1 LTD, its General Partner

By:    /s/                                                                                    
Name:
Title:

SOURCE Shanda Games Limited