Shanda-Sina Deal: Shanda Couldn't Wait To Spend The Money
From ChinaTechNews: Shanda Couldn't Wait To Spend The Money
"When I wrote a column about the Shanda IPO several months ago, I knew Shanda might decide to squander away its money, but I didn't know how fast my prediction would come true. Fresh from raising upwards of US$200-300 million in both the equity and debt markets, Shanda has now, in the space of a few short months, decided to spend most of the money on a marginally-related company. This is truly remarkable and could even be a world record."
"There are two problems with this deal. First, when Shanda did its IPO last year it marketed itself as an online games creator, which it is. The money it asked from investors was presumably to go to developing Shanda's online games. But Sina.com is a web portal. Sure, Sina has an online games business but that is only one part of Sina's company. So Shanda is using its IPO money on something that bears little relationship to its reason for asking for the money." Read more