The deal, which comprises $60 million in cash and $20 million in equity arrangements, is also the firm's largest buy to date, its chief executive said.
As a result of the acquisition, Shanda Games will be able to diversify from operating multiplayer online role-playing games with most of its user base in China, to gaining access to Mochi's portfolio of 15,000 web-browser games and an international user base.
This is international expansion for them, said JPMorgan analyst Dick Wei.
The target company has good distribution capabilities overseas. So potentially Shanda can distribute through this platform and domestically distribute 15,000 games, Wei said.
Shanda Games competes with Tencent Holdings in China's online game industry, worth $4 billion in 2009 according to research firm iResearch.
Shanda Games was overtaken last year by Tencent who became China's largest online game player. Tencent runs a games portfolio of mainly web-browser games.
San Francisco-based Mochi Media runs a platform to distribute online games and has 140 million monthly active users. It earns most of its revenue from advertising.
The deal is expected to close in the first quarter of 2010.
EYEING MORE BUYS
Shanda Games, which was spun off from Shanda Interactive Entertainment last year in a $1 billion initial public offering, will be looking for more buys on the content sourcing and development front, its chief executive said.
At this time we always keep our mind open to great opportunities in content and to strengthen our platform, Diana Li told Reuters in an interview, adding that nothing immediate was on the horizon.
Shanda Games announced last Friday that it would buy Shanghai-based online game developer Goldcool Games, but did not reveal the acquisition price.
Li said it will fund the buys through its IPO proceeds and free cash and had no target number of acquisitions for the year.
The Government of Singapore Investment Corp, Singapore's biggest sovereign wealth fund, bought a 5.4 percent stake in Shanda Games, according to a regulatory filing made a few weeks after Shanda's IPO last year.
(Editing by Muralikumar Anantharaman)