Changyou.com Limited (NASDAQ: CYOU), a leading online game developer and operator in China, announced that it would be acquiring 17173.com, a leading game news portal, from Sohu.com Inc. (NASDAQ: SOHU), its majority shareholder. 17173.com is an authoritative news source and a leading online destination for a wide variety of games. Changyou is expected to pay US$162.5 million in cash for all of the company’s assets.
The deal is part of Changyou’s attempt to establish itself as a game services platform as well as a product developer. Both companies see great synergies in bringing together game development with game promotion and additional gamer services.
“Changyou’s acquisition of the 17173 business provides us with a powerful base to jumpstart our services and platform initiative. As a leading online destination for gamers in China, 17173 has strong media presence in the games sector and a vast base of users for which we can develop services and tools to grow 17173 into a leading platform and one-stop-shop service-provider for gamers. Aside from news services, gamers today have needs for downloading, sharing, and trading services, as well as online community, and more. This acquisition will further drive our efforts to serve gamers not only on the product side, but also on the service side.
We look forward to building on the brand strength 17173 has developed over the past 10 years and enhancing its services to make it an even more powerful and effective marketing medium for advertising clients. Our leading position in Web-based games and our mobile game initiatives give us advanced market knowledge that 17173 can leverage to plan and grow its news channels more effectively. In addition, our offline promotion workforce and our network of overseas game companies can also be used to promote 17173 and further increase its penetration in domestic market and accelerate its expansion into new markets.”
– Tao Wang, CEO, Changyou
In addition to the acquisition the companies also entered into an agreement for Sohu to provide technical support and links and advertising space to Changyou, including the maintenance of a virtual currency payment system. The new services relationship will generate revenues of about US$30 million for Sohu.
Share and Enjoy:
“This transaction helps to re-align our business activities, and brings together Sohu’s two leading game-related businesses, and their respective management teams. We share Changyou’s vision for 17173 and support their strategy to scale its portal and services to deliver more content, tools and services to an even larger audience. The combination of Changyou and 17173 is expected to bring about synergies that will increase the shareholder value of both businesses over the long term, and Sohu will enjoy the benefit of any such increase as a majority shareholder in Changyou.”
– Charles Zhang, Chairman and CEO, Sohu
