Sina fights off unwelcome bidders

Selling fantasy games is a lucrative business

Sina Corp, the US-listed firm behind China's biggest internet portal, has adopted a shareholder rights plan to guard against a possible takeover.

Sina came up with the scheme within days of online games firm Shanda Interactive Entertainment revealing it had acquired 19.5% of Sina's shares.

If Shanda lifts its holding to 20%, Sina shareholders get the right to buy Sina shares at half price.

The scheme - known as a "poison pill" would allow Sina to issue new shares.

Both Sina and Shanghai-based Shanda are listed on New York's Nasdaq technology exchange, where poison pills are commonly used to protect companies from hostile takeovers.

Prize prospect

Sina has found itself at the centre of takeover speculation since Friday, when Shanda revealed in a filing to the US market regulator that it had built up the 19.5% shareholding at a cost of about $230m (£120.5m) between mid-January and 10 February.

A merger would create a firm offering online news and entertainment, role-playing games, internet shopping and wireless messaging. It would have combined revenues of $365m, based on 2004 accounts.

Sina's shares rose 10% on Friday on news of Shanda's stake-building activities, and a further 11% during trading on Tuesday.

Late on Tuesday, Sina struck back with the poison pill.

However, analysts said the pill might not prove fatal for Shanda's chances of acquiring Sina as it could still form alliances with other shareholders.

Shanda's move is also seen as having put Sina in play, raising the possibility that a large international internet player might eventually bid.

Shanda is China's biggest internet games designer although Sina has its own games business.

Netease profits

Meanwhile, China's second-biggest online games firm Netease.com has posted a 38% increase in fourth-quarter net profit to $15.7m.

Netease's sales grew 22.6% to $23.8m.

It specialises in group role-playing games and recently notched up 159,000 players online simultaneously.

Its most popular titles are based on the traditional story of mischievous Monkey King's 'Journey to the West'.