The9 Limited (ADR)(NASDAQ:NCTY) was popular as a renowned gaming operator in China. However, after its good times in mid-2000s, the company lost nearly of its licenses on leading franchises. The stock has declined from its high levels and revenues are declining year after year. Additionally, there are no additional information coming from the management about the future assignments.
The highlights
The9 Limited comes in the list of online gaming operators in Shanghai. Its main activities include operating and licensing different types of online games in China. The firm was established in 1999 and turned to be one of the pioneer online gaming operator firms, but since last few years, the company’s performance is declining and there seems to be no indication of recovery in the upcoming period.
In last week of April, The9 Limited reported that it has signed a definitive deal with L&A International Holding Limited. It is a Cayman Islands firm with its shares trading on the Growth Enterprise Market of the renowned Stock Exchange of HK Limited. The announced deal also involves certain other stake holders of Red 5.
The deal
As per the recently announced The9 deal, they will exchange nearly 30.6% equity stake that it owns in its subsidiary firm Red 5 Studios, Inc. for nearly 153 million newly issued shares of firm in discussion, L&A International. The firm currently owns about 63.4% equity stake in Red 5. The9 Limited reported that the total consideration for the deal for all the contributing equity holders is almost US$76.5 million, indicating Red 5’s assessment at US$170 million. The closure of the deal is subject to customary closing terms stipulated in the deal. Red 5 comes in the group of online game developers in the United States. For now, it is working to give the MMOFPS game a large-scale commercial launch in China in 2H2016.
