Under the terms of the offer, Sohu would pay $5 per Class A share, or $10 per American Depositary share (ADS), which represents two ordinary shares.
As Sohu holds all the Class B ordinary shares of Changyou currently outstanding, the transaction, if completed, would result in Changyou becoming a privately held, indirect wholly owned subsidiary of Sohu, and Changyou’s ADSs would be delisted from the Nasdaq.
In the letter sent to Changyou, Sohu detailed:
We believe that this Proposal provides a very attractive opportunity to Changyou’s shareholders. Although this Proposal does not entail a change of control transaction, this Proposal represents a premium of 69% over the closing price of Changyou’s ADSs on September 6, 2019 and a premium of 57% over the average closing price of Changyou’s ADSs during the last 30 trading days.
Shares of Changyou traded up about 51% to $8.94 early Monday, in a 52-week range of $5.43 to $22.27. The consensus price target is $11.88.
Sohu shares traded up about 9%, at $11.83 in a 52-week range of $8.79 to $23.60. The consensus analyst target is $20.44.