Sohu's Changyou.com Announces $500 Million Special Cash Dividend
The amount of the dividend payable to Sohu is expected to be approximately $340 million.
Shares of Changyou.com Ltd. (Nasdaq: CYOU) jumped more than 10 percent today after it announced a special cash dividend of $9.40 per American depositary share, or approximately $500 million.
The Beijing-based company was trading at $29.83 per share by mid-afternoon in New York, having pulled back slightly, but was still up nearly 7 percent and was one of the top gainers among the 150 Chinese ADSs tracked by CapitalWatch.
"After this distribution, we are confident that we will have sufficient capital for our business including to fully fund our R&D, execute game strategy, take advantage of new opportunities as they arise,and maintain our leading position in the online game market," said Dewen Chen, Changyou's CEO. "We believe that we will continue to be able to generate strong cash flows."
Shareholders of record at the close of business on April 20 would be entitled to receive the special cash dividend of $4.70 per Class A ordinary or Class B ordinary share, or $9.40 per ADS, each of which represents two Class A ordinary shares, the company said.
Sohu, the largest shareholder of Changyou, would be the largest recipient of the dividend with a payment of approximately $340 million. Sohu does not expect to pay any of such dividend to its stockholders, as the proceeds would be used to support Sohu's operations, the company said.
Changyou, which started as a unit of Sohu.com Inc. (Nasdaq: SOHU) in 2003, was 68.5 percent owned by the internet giant, according to the company's 2017 proxy statement.
Changyou develops, operates, and licenses online games for personal computers and mobile devices, and includes an Online Game segment, Platform Channel segment for online advertising services, as well as Internet valued-added services offered on the Dolphin Browser and RaidCall.