Qu Haibin, former CEO of Chinese online media and game operator Shanda Interactive's defunct wireless value-added services subsidiary Hurray (also known as Shanda Wireless), confirmed recently that Hurray and Shanda had quietly signed a management buy-out (MBO) agreement on December 15, 2011, officially ending Hurray's relationship with the Shanda system. Hurray management had proposed the MBO arrangement to Shanda, whose chairman and CEO Chen Tianqiao approved the idea. Following the MBO, Qu returned to Shanda, and Hurray veteran Wu Feng was appointed CEO of the newly independent company. The arrangement also provided for projects including the "You Ni" mobile IM application to be transferred from Hurray to the Shanda group of companies. An industry source said that You Ni, with its tens of millions of users, became a wholly owned subsidiary of Shanda after the MBO.
Qu said the terms of the MBO forbade him from disclosing the amount of the agreement, but suggested that the reporter contact representatives of either Shanda or Hurray for further information. Calls to Wu Feng's phone went unanswered.
Shanda spokeswoman Zhang Qin said that Hurray's traditional business was as a mobile wireless value-added service provider, meaning that the company did not quite fit in with Shanda's overall business, and confirmed that Shanda and Hurray had reached an agreement in late 2011. She declined to reveal the terms of the agreement, however.
After it acquired Hurray, Shanda had initially looked to place the company in charge of planning and coordination for all of its wireless services, but later formed the Shanda Wireless division. Expansion of other Shanda businesses, including Shanda Games (Nasdaq: GAME), Shanda Literature, and online video subsidiary Ku6 (Nasdaq: KUTV), into the wireless area led to disagreement over the new division, however, and ultimately wireless services remained the responsibility of each individual subsidiary.
An industry source said that Hurray had already become profitable following the MBO, albeit minimally so.
Source:marbridgeconsulting