Zeus Entertainment Halts Plan to Invest in Baidu Video
Zeus Entertainment, 9/19/16
Dalian-based browser game and mobile game developer Zeus Entertainment (002354.SZ) recently announced that it has abandoned plans to invest in Xiaodu Huyu Technology, operator of online video platform Baidu Video, which was recently spun out from Chinese internet company Baidu (Nasdaq: BIDU).
In April 2016, Zeus Entertainment, Baidu Netcom Science Technology, Xiaodu Huyu, and other investors signed a stock transfer and capital increase agreement whereby Zeus planned to acquire a 10% equity stake in Xiaodu Huyu. Under the agreement, Zeus would have invested RMB 118.462 mln to acquire rights to RMB 326,000 in existing registered capital, along with an additional RMB 74.038 mln to subscribe for RMB 204,000 in newly issued registered capital.
However, it later became apparent that Xiaodu Huyu's business requires it to hold a License to Broadcast Audiovisual Programming Over an Information Network, which according to relevant regulations is only available to enterprises that do not have any foreign investors. Zeus Entertainment is classified as an enterprise with investors from Taiwan, Hong Kong, and Macau along with mainland investors, and therefore is considered a foreign-invested entity.
Due to the impact the investment by Zeus would have on Xiaodu Huyu's ability to acquire relevant business licenses, the parties determined to terminate the investment plan.
Editor's Note: Baidu Netcom operates Baidu's webpage search and the Hao123 website directory. For more information on Zeus's investment in Baidu Video, please see "Baidu Video to Be Spun Off, Secures RMB 1 Bln Funding," MD 4/20/16 issue.
Keywords: Internet online video Baidu BIDU 002354.SZ Zeus Entertainment regulation M&A spin-off Carrier Plan
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