Cool 6 is valued at 334 million yuan, completed privatization or entered the Shanda VR landscape

Some analysts believe that behind the delisting of Ku6, it is likely to be followed by the return to A-shares.

Ku6 Media announced on the 6th that it has signed a final M & A agreement with Shanda Investment Holdings Co., Ltd. and Ku6 Acquisition Co., Ltd.(a wholly-owned subsidiary of Shanda). Shanda will acquire Ku6 at a cash price of US$0.0108 per common share or US$1.08 per ADS. Based on this offer, Ku6 Media's total valuation is US$51.5 million, or approximately RMB 334 million.

At this point, the seven-year "sadistic love" between Shanda and Cool 6 ended in a privatization contract. As of the close of U.S. Eastern Time on April 5, Ku6 Media's share price was US$0.97, which has dropped nearly 90% from its peak of US$8.

Today is not what it used to be. Ku6 has long fallen out of the top ten video websites, and at this time Shanda Group has transformed into a large investment holding group with assets of tens of billions of yuan. It is worth noting that Shanda, which had already chosen to "dump the burden" and transfer control of Cool 6 in 2014, re-purchased its shares in Cool 6 in May last year. Then in February this year, Cool 6 was privatized. news. So, why should Cool 6 be privatized at this time?

An analyst who has long been following the video industry said that it does not rule out the possibility that Cool 6 will be integrated with a series of new businesses represented by VR under Shanda in the future. The reason why Shanda chose Cool 6 is because Cool 6 is the most suitable choice for Shanda, because the more high-ranking video websites are now famous, such as Youku Tudou and Ali, iQiyi and Baidu. Although Cool 6 is small in size, its main attribute of UGC content makes it more user stickiness; as a content platform, it also has natural integration with VR.

Another speculation about Cool 6 is to catch up with the wave of privatization. The delisting of Chinese stocks and the return of A-shares has always been a hot topic in the industry, and related cases are common. Even if such an asset "concept" is acquired, it will have good financial returns. For example, Songcheng Performing Arts acquired six rooms in 2015 at a price of 2.6 billion yuan.

Some analysts believe that behind the delisting of Ku6, it is likely to be followed by the return to A-shares.

1. Cool 6 Network:

Cool 6, which has long since faded out of the video industry, has returned to public view due to a privatization announcement, but its glory is no longer there.

In 2006, Li Shanyou, then editor-in-chief of Sohu, left and founded the video sharing website Ku6.com.

In 2008, Ku6.com, which was established only two years ago, received two consecutive investments at an alarming rate, and became the first company to obtain a video license issued by the State Administration of Radio, Film and Television and the exclusive video-on-demand partner for the Beijing Olympics. Its traffic and influence have increased greatly, and it has successfully ranked third in the industry.

In 2009, Cool 6 came together with Shanda, the entertainment empire at the time, and was listed on NASDAQ through integration with Huayou Century.

In April 2010, Ku6 teamed up with CNTV to obtain the rights to the World Cup in South Africa. With the explosion of traffic during the World Cup, it significantly narrowed the gap with Youku, the number one player in the industry, and Tudou, the second player in the industry. In June, Ku6 was spun off from Huayou Century and was listed independently.

At that time, Ku6 was enjoying its peak-at the end of 2010, Ku6 achieved a market value growth of more than 250%, and its share price once climbed to US$8.4.

However, with a series of decision-making mistakes and leadership changes, Cool 6 began its own dangerous journey:

2011 was a critical year for the reshuffle of the video website industry. This year, we are familiar with iQiyi, LeTV, Sohu Video and other late-stage rookies have joined the copyright war, but Cool 6 has been slow to move due to leadership differences over development models. In the end, Li Shanyou, who wanted to spend a lot of money on film and television copyright and original content, was taken over by Chen Tianqiao, who was trying to cut expenses and transform video information. He sadly left the Ku6 website he founded, and the share price of Ku6 fell below the issue price.

Later, although Shanda injected US$100 million into Cool 6 to stabilize its skeleton, the subsequent "purge layoffs" caused the loss of Cool 6's backbone and panic was panicked. Ku6's share price fell from its peak again and never reached $8 again.

In June 2013, Cool 6, which had slipped out of 10 in the ranking, invited Du Fang, a senior TV person from Zhejiang Satellite TV, to serve as CEO. Relying on Du Fang's many years of media resources, Ku6 has joined hands with Zhejiang Satellite TV, Beijing Satellite TV and other TV stations to create multiple programs, and began to regain some lost popularity and brand recognition, while establishing UGC as the mainstream business direction. However, due to lack of manpower and funds, the development of these two businesses has been unable to continue.

2. Shanda re-purchased Cool 6 and entered the Chen Tianqiao VR landscape?

It is worth noting that Shanda Group had already transferred control of Cool 6 in 2014, but bought it back a year later.

With the comprehensive contraction of Shanda's "Internet Disney" strategy, Shanda made the decision in 2014 to "sell 41% of Cool 6 Media's shares to Sky Profit."

However, just a year later, in May 2015, Shanda re-bought its shares in Ku6.com, holding 70% of its shares, becoming the largest shareholder again, and a series of Shanda executives took over. However, this news attracted almost no attention from the industry at the time, and relevant parties were silent about the reasons for the repurchase.

At this time, Ku6.com had been warned many times by Nasdaq to delist because its stock price had been below US$1 for a long time. The privatization process of Ku 6 may also be related to the face of delisting. So what value does Cool 6 have to Shanda at this time?

According to Ku6's financial report, Ku6 is still exploring new models. In the fourth quarter of 2015, Ku6 established a VR (virtual reality) community and a VR video show platform to seek investment opportunities.

As we all know, with the transformation of Shanda Group into an equity investment group, VR has become one of Chen Tianqiao's most concerned areas. According to media reports, Shanda has invested in VR companies including Sólfar Studio, an Icelandic developer that launched "Everest VR" to allow people to climb Mount Everest through VR experience, and UploadVR, a vertical media in the VR industry; according to relevant sources, Shanda has also invested in an American VR technology startup Survios and an augmented reality company called AtheerLab.

In an exclusive interview with reporters in February this year, Qiu Wenyou, president of Shanda Group, confirmed that he had invested in the VR theme park TheVoid, and said that he was selecting partners in China to jointly promote the construction of the VR theme park.

Landing on Cool6 found that in terms of channel ranking on Cool6, the newly launched VR community ranks second only to the home page. It has channels such as Ascape virtual travel world, VR glasses, VR technology, and VR games. It also has reached a strategic partnership with the largest VR panoramic technology platform in China 720 Cloud.

If it can be integrated with a series of new businesses represented by VR under Shanda Group as the analyst mentioned above, then Cool 6 still has many possibilities. It's just that at this time, even the basic user experience is difficult to guarantee. If you want to bring back to life, there are still many things to be done.

3. The market and U.S. stocks are both frustrated, returning to A-shares may be

a new starting point. On the positive side, although Cool6 is frustrated in terms of both the market and stock price, it is still one of the top 20 video websites in China. Due to its main focus on UGC content, it has higher user stickiness and activity; and as a content platform, it also has natural integration with VR. It is not ruled out that Cool6 will integrate with Shanda's series of new businesses represented by VR in the future. And these are all stories of A-share love.

In fact, it has been common for Chinese stocks to choose to delist and return to A-shares since 2015.

In August 2015, Qixi Holdings, known as the "first share of overseas returnees", announced that it planned to realize Focus Media's backdoor listing through major asset swaps, share issuance, cash payment to purchase assets and supporting fund raising. After the resumption of trading in September, its share price has risen from the price of about 13 yuan before the suspension. Compared with the highest price of around 62 yuan in mid-November last year, the range has increased nearly 4 times; Century Cruises, which was borrowed by Giant Network, went through 20 consecutive daily limits.

According to the unaudited fourth quarter 2015 financial report released by Ku6 Media, Ku6 has turned a profit, with a net profit of US$80,000.

Of course, if you want to tell this capital story well, it will also test Shanda Group's resource integration capabilities. We will wait and see where Cool 6 will go after delisting.

Editor: yvonne