KongZhong Corp. (KONG) Announces Acquisition of Shanghai Dacheng Network

In the company’s news yesterday,

KongZhong Corp. announced that it has entered into a definite agreement to acquire Shanghai Dacheng Network Technology. Shanghai Dacheng is a leading developer of three-dimensional (3D) massively multi-player online role-playing games based in Beijing and Shanghai. Based on Dacheng’s 2010 net profit after tax, as calculated under US GAAP rules, KongZhong would pay up to $80 million, in a mix of cash and the company’s shares, to Dacheng’s shareholders. KongZhong expects this deal to close in the first quarter of 2010.

With the strong performance of Dacheng’s newest 3D online game, Loong, the company is becoming one of China’s leading 3D online game developers and a leader in the Chinese mobile game sector. The company developed its own proprietary 3D game engine called Dazzler 3D which meets the unique technical requirements of the Chinese market for massively multi-player online role-playing games (MMORPG).

The CFO of KongZhong, Jay Chang, said that “By combining our leading mobile game business with Dacheng’s self-developed 3D game engine and game development skills, the post-acquisition company is poised to become a leading multi-platform digital entertainment and gaming company with focus on two of the fastest growing segments in China’s game market, 3D MMORPG’s and mobile games.” KongZhong’s previous experience in operating some of China’s largest internet sites will also help support the rapid development of their gaming business in the coming years.

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