China's second largest online game operator, Shanda Interactive Entertainment Ltd, will sell almost 40 per cent of its stake in the Internet portal Sina Corp for US$99.11 million.

The sale will narrow the scope of Shanda's investment and free up cash aimed at shaping up its lacklustre financial performance.

Shanghai-based Shanda said yesterday in a statement it would sell some 3.70 million shares of Sina to Citigroup Global Market Inc for US$99.11 million, while keeping the rest of its 6.12 million shares, about 11.4 per cent of Sina's outstanding shares.

The transaction is expected to conclude on Thursday.

Shanda spokesman Zhuge Hui said Sina's investment will remain a major part of the company's growth strategy, but declined further comment.

The American depository share of the second largest online game operator on the NASDAQ Stock Market rose by 1 per cent from US$15.34 to US$15.50 in after-hours trading, while Sina's fell slightly from US$27.90 to US$27.88.

"It is a good time to sell some of the stakes," said Peter Lu, a senior Internet analyst with China IntelliConsulting Ltd in Beijing.

The sale allows Shanda to benefit from the rise of Sina's stock prices, while maintaining considerable influence on the Beijing-based Internet portal.

Since August, Sina's share price has risen from US$20.23 to US$27.90 with strong performance of its online advertising business.

In February 2005, Shanda said it acquired 9.82 million shares of Sina, the top Internet portal in China, at a cost of US$230 million through several open market acquisitions. With the move it became Sina's largest investor with a 19.5 per cent stake.

The acquisition was a key step for the then top Chinese online game operator to work toward an online media network like Disney.

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