Completion of a Changyou (CYOU) buyout is highly likely, and the only question is how the value will be shared between Sohu (SOHU) and the public shareholders of Changyou. I believe a $15/ADS price would provide a fair return to Changyou shareholders, while providing Sohu with the opportunity to profit from Changyou's improving outlook.
Topics:
- Changyou's games business has been consistently profitable
- Changyou's peers listed in Hong Kong and China trade at an average P/E over 20
- Changyou's business depends heavily on its TLBB franchise
- Changyou has a new TLBB mobile