Shanda-Sina Deal: Cash to burn, scores to settle

From Weekend Standard: Cash to burn, scores to settle

"``Fresh from raising US$300 million Shanda has, 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,'' Chinese technology commentator Perry Wu said. ``This is a classic case of [Shanda] executives making decisions based on how the stock market is currently viewing a company's stock price, not on what is in the long-term interests of the company.''

"For now, Sina seems to be unhappily caught in the eye of the hurricane. Shanda and its crusading boss are unlikely to give up at 19.5 percent. Having tasted blood, they want more.
``This is being viewed by both companies as a takeover,'' said one individual with knowledge of the deal. ... ``A 19.5 percent stake is not going to benefit Shanda significantly. A full combination is the more favorable option for Shanda,'' said one Hong Kong-based analyst."

"Whatever happens, though, any final agreement may be weeks or even months away. China's newspapers, Web sites and radio stations, awash with rumor and counter-rumor about the winners and losers, have much talking yet to do." Read more