Tencent initiates merger of China’s Twitch-like sites Huya and Douyu in move to consolidate gaming lead
- The deal comes as Tencent aims to cement its position in the domestic gaming and e-sports market as Chinese tech companies come under heavy scrutiny in the US
- After the transaction, Tencent’s stake in Huya would be 51 per cent and its voting power will increase to 70.4 per cent
Chinese internet giant Tencent Holdings has proposed merging the country’s two biggest video game live-streaming platforms in a deal that would give it a controlling stake in the new entity and help secure its leading position in the domestic market for games and e-sports.
Tencent has proposed a stock-for-stock merger of NYSE-listed Huya and Nasdaq-listed Douyu, according to separate statements by the companies on Monday. For Huya, Tencent would purchase 30 million shares from owner Joyy Inc for US$810 million in cash, in addition to buying 1 million shares from Huya chief executive Rongjie Dong, according to a statement from Joyy on Monday.
After the transaction, scheduled to be completed no later than September 9, Tencent’s stake in Huya would be 51 per cent and its voting power will be 70.4 per cent, according to Huya.
Tencent, which currently owns a 37 per cent stake in Huya and 38 per cent of Douyu, is looking to become the largest shareholder in the merged entity, according to an earlier report by Bloomberg. The deal would create an online giant with more than 300 million users and a combined market value of US$10 billion, according to the report.
“The merger will allow Tencent to eliminate unnecessary competition between its two game-streaming assets, which will help to drive down content costs and form a stronger combined entity to fend off competition from other platforms,” Bloomberg Intelligence analyst Vey-Sern Ling said.
Tencent declined to comment. Douyu and Huya did not immediately reply to questions sent by the Post.
