BEIJING, Sept. 9, 2019 /PRNewswire/ -- Changyou.com
Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading
online game developer and operator in China, today announced that its board of
directors (the "Changyou Board") has received a preliminary
non-binding proposal letter (the "Proposal Letter"), dated
September 9, 2019, from Sohu.com
Limited ("Sohu")(NASDAQ: SOHU), a Cayman
Islands company and the ultimate controlling shareholder of
Changyou, to acquire all of the outstanding Class A ordinary shares
of Changyou, including Class A ordinary shares represented by
American depositary shares ("ADSs"), each representing two Class A
ordinary shares, that are not already owned by Sohu for a purchase
price of $5.00 per Class A ordinary
share, or $10.00 per ADS, in cash
(the "Proposed Transaction"). As Sohu holds all of the Class
B ordinary shares of Changyou that are currently outstanding, the
Proposed Transaction, if completed, would result in Changyou
becoming a privately-held, indirect wholly-owned subsidiary of
Sohu, and Changyou's ADSs would be delisted from the NASDAQ Global
Select Market. A copy of the Proposal Letter is attached hereto as
Exhibit A.
The Company expects that a special committee of the Changyou
Board, composed solely of independent directors, will consider the
Proposal Letter and the Proposed Transaction. The Company cautions
that the Changyou Board has just received the Proposal Letter and
has not made any decisions with respect to the Proposal Letter and
the Proposed Transaction. There can be no assurance that Sohu will
make any definitive offer to Changyou, that any definitive
agreement relating to the Proposal Letter will be entered into
between Changyou and Sohu, or that the Proposed Transaction or any
other similar transaction will be approved or consummated.
The Company also received formal confirmation today from Dr.
Charles Zhang that he is no longer
pursuing his 2017 non-binding proposal to acquire Changyou
himself.
The Company does not undertake any obligation to provide any
updates with respect to this or any other transaction, except as
required under applicable law.
Safe Harbor Statement
This announcement may contain forward-looking statements.
Statements that are not historical facts, including statements
about the Company's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties. The Company cautions you that a number of important
factors could cause actual results to differ materially from those
contained in any forward-looking statement. There can be no
assurance that Sohu will make any definitive offer to the Company,
that any definitive agreement relating to the Proposal Letter will
be entered into between the Company and Sohu; or that the Proposed
Transaction or any other similar transaction will be approved or
consummated.
About Changyou
Changyou.com Limited (NASDAQ: CYOU) is a leading developer and
operator of online games in China
with a diverse portfolio of popular online games, such as
Tian Long Ba Bu ("TLBB"), one of the
most popular PC games in China, as
well as a number of mobile games. Changyou also owns and operates
the 17173.com Website, a leading game information portal in
China. Changyou began operations
as a business unit within Sohu.com Limited (NASDAQ: SOHU) in 2003,
and was carved out as a separate, stand-alone company in
December 2007. It completed an
initial public offering on April 7, 2009. Changyou has an
advanced technology platform that includes advanced 2.5D and 3D
graphics engines, a uniform game development platform, effective
anti-cheating and anti-hacking technologies, proprietary
cross-networking technology and advanced data protection
technology. For more information, please visit
http://ir.changyou.com/.
For investor and media inquiries, please contact:
In China:
Mr. Yujia Zhao
Investor Relations
Tel: +86 (10) 6192-0800
E-mail: ir@cyou-inc.com
In the United
States:
Ms. Linda Bergkamp
Christensen
Phone: +1 (480) 614-3004
E-mail: lbergkamp@ChristensenIR.com
Exhibit A
September 9, 2019
The Board of Directors
Changyou.com Limited
Changyou Building, Raycom Creative Industrial Park
No. 65 Bajiao East Road, Shijingshan District
Beijing 100043, People's Republic of China
Re: Preliminary Non-binding Proposal to Acquire Changyou.com
Limited
Dear Members of Changyou.com Limited Board of Directors:
Sohu.com Limited, a Cayman
Islands company ("Sohu," "us" or "we") and the ultimate
parent and controlling shareholder of Changyou.com Limited, a
Cayman Islands company
("Changyou"), is pleased to submit this preliminary non-binding
proposal (this "Proposal") to acquire all of the outstanding Class
A ordinary shares of Changyou, including Class A ordinary
shares represented by American depositary shares ("ADSs"), each of
which represents two Class A ordinary shares, that are not already
owned by us on the principal terms and conditions described in this
Proposal (the "Acquisition").
We believe that this Proposal provides a very attractive
opportunity to Changyou's shareholders. Although this Proposal does
not entail a change of control transaction, this Proposal
represents a premium of 69% over the closing price of Changyou's
ADSs on September 6, 2019 and a
premium of 57% over the average closing price of Changyou's ADSs
during the last 30 trading days.
The terms and conditions upon which we are prepared to pursue
the Acquisition are set forth below. We are confident in our
ability to consummate an Acquisition as outlined in this
Proposal:
1. Sohu as Sole Acquiror. We will be the
sole purchaser in the Acquisition. Please also note that we are
interested only in pursuing the Acquisition and are not interested
in selling our Changyou shares or in participating in any other
transaction involving Changyou. As we hold all of the Class B
ordinary shares of Changyou that are currently outstanding, the
Acquisition, if completed as proposed, would result in Changyou
becoming an indirect wholly-owned subsidiary of Sohu, and
Changyou's ADSs would be delisted from the NASDAQ Global Select
Market.
2. Purchase Price and Acquisition. We
propose to acquire all of the outstanding Class A ordinary shares
of Changyou, including Class A ordinary shares represented by ADSs,
that are not already owned by us at a purchase price equal to
US$5.00 per Class A ordinary share,
or US$10.00 per ADS, in cash. We will
form an indirect subsidiary for the purpose of implementing the
Acquisition. As we hold over 90% of the total voting power in
Changyou, the Acquisition will be in the form of a short-form
statutory merger with Changyou of the indirect subsidiary to be
formed by us, in accordance with section 233(7) of the Companies
Law (as amended) of the Cayman
Islands.
3. Financing. We intend to finance the
Acquisition with a combination of debt financing and our existing
cash. Debt financing is expected to be provided by loans from one
or more third-party financial institutions. We are confident that
we can timely secure adequate financing to consummate the
Acquisition. To this end, we have received indications from
potential sources of debt financing that, subject to customary
assumptions and conditions, they are highly confident that they
will be able to arrange financing for the Acquisition. We expect
that commitments for the debt financing, subject to customary
assumptions, terms, and conditions, will be in place when the
Definitive Agreements (as defined below) are executed.
4. Due Diligence. We and parties providing
financing will require a timely opportunity to conduct customary
due diligence on Changyou. We request that the board of directors
of Changyou (the "Changyou Board") accommodate such due diligence
request and approve the provision of confidential information
relating to Changyou and its business, including its subsidiaries
and variable interest entities, to possible sources of debt
financing subject to a customary form of confidentiality
agreement.
5. Definitive Agreements. We are
prepared to negotiate and finalize a plan of merger and other
definitive agreements (the "Definitive Agreements") expeditiously.
Our Proposal is subject to execution of the Definitive Agreements,
which are expected to include provisions typical for short-form
statutory merger transactions of this type.
6. Process. We believe that the
Acquisition will provide value to Changyou's shareholders. At the
same time, we recognize that the Changyou Board will evaluate our
Proposal and the Acquisition independently before it can make its
determination whether to endorse it. Given our position as
Changyou's controlling shareholder, we believe it is prudent and in
the best interests of Changyou for the Changyou Board to establish
a special committee of independent members of the Changyou Board to
consider our Proposal and the Acquisition (the "Special
Committee"). We also expect that the Special Committee would retain
independent legal and financial advisors to assist it in its
work.
7. Confidentiality. We intend to submit
to the Securities and Exchange Commission (the "SEC") a Form 6-K
disclosing this Proposal, and we expect that Changyou will issue a
press release, and submit to the SEC a corresponding Form 6-K,
disclosing its receipt of this Proposal from us. However, we are
sure you will agree with us that it is in all of our interests and
those of Changyou's public shareholders to ensure that our
discussions relating to the Acquisition proceed in a strictly
confidential manner, unless otherwise required by law, until we
have executed the Definitive Agreements or terminated our
discussions.
8. No Binding Commitment. This Proposal
is not a binding offer, agreement, or agreement to make a binding
offer or agreement at any point in the future. This Proposal is our
preliminary indication of interest and does not contain all matters
upon which agreement must be reached in order to consummate the
proposed Acquisition, nor does it create any binding rights or
obligations of any person. The parties will be bound only upon the
execution of mutually agreeable definitive documentation.
In closing, we would like to express our commitment to working
together to bring the proposed 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,
Sohu.com Limited
By: /s/ Charles Zhang
Name: Charles Zhang
Title: Chief Executive Officer and Chairman of the Board of
Directors
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SOURCE Changyou.com Limited