Shanda Games (NASDAQ:GAME) is on its own now.
China's online gaming pioneer priced its offering of 83.5 million shares at the high end of its $10.50 to $12.50 range this morning, becoming the largest stateside IPO by a Chinese Internet company.
Shanda Interactive (NASDAQ:SNDA) investors are probably still scratching their heads. Sohu.com (NASDAQ:SOHU) spun off its Changyou.com (NASDAQ:CYOU) arm earlier this year -- and CDC (NASDAQ:CHINA) took CDC Software (NASDAQ:CDCS) public -- but online gaming makes up the lion's share of Shanda Interactive's business.
Spinoffs help unlock the value in conglomerates where the sum of the parts may be worth more individually, but there is little to Shanda Interactive beyond its popular Web-based diversions.
The success of the IPO validates the strategy, though. Shanda Interactive will retain 71% of the company, even after selling 70.5 million shares of the 83.5 million offering. Shanda Interactive will be adding $880 million (before underwriters take a small nibble) to its cash-rich balance sheet. Shanda Interactive already had $778 million in cash and short-term investments at the end of the quarter, so roughly half of today's market cap is backed by the company's war chest.
Shares of Shanda Games opened just below $12.50, but investors weren't expecting the kind of warm welcome that A123 Systems (NASDAQ:AONE) delivered yesterday. There are too many shares outstanding, and investors can now simply snap up Shanda Interactive as a way to play Shanda Games along with a pinata stocked with well more than $1.6 billion in liquid goodness.
So welcome to the party, Shanda Games, even if all it seems to have done is double Shanda Interactive's coffers.
