Sina has remained silent over the possibility of a full takeover by Shanghai-based Shanda, but reports have suggested that its actions have been loud and clear, after the company adopted a counter-measure in an effort to fend off potential bidders.
Despite increasing shares by more than 10% on Friday, Sina has not welcomed the move by Shanda, especially as analysts have predicted that other companies, such as internet giant Yahoo who already has an online auction joint venture with Sina, will follow the example and show a sudden interest in merging with the ailing internet company.
Sina’s response, it was reported earlier this week, has been to adopt what is known as a poison pill, or defensive shareholder rights plan, in which Sina will aim to flood the market with shares, making it difficult for one bidder to take control. Sina has threatened to exercise its plan to allow rights holders to acquire shares at half price if Shanda purchases an extra 0.5% of Sina shares.
Although some analysts have forecast a clash of cultures, there is a strong feeling that a possible merger between the two companies will offer several advantages.
First, it will combine Shanda’s online role-playing strength with Sina’s online news, entertainment and mobile phone messaging services to offer improved services and increase revenue. Second, Shanda, who claim to have up to 2 million customers, may help Sina in its unsuccessful attempts to develop MMORPGs due to the small size of its business.
Finally, reports suggest, Sina’s Nasdaq-listed rivals, Netease and Sohu, will face rapid growth and fierce competition from a host of rivals and changes of policy, and will find it difficult to maintain dominance in China’s portal sector.
