UPDATE: In Line With Tencent Plans, Huya & DouYu Has Entered An Agreement To Merge
? Merger
Chinese streaming platforms Huya (NYSE: HUYA) and DouYu (NASDAQ: DOYU), has entered an agreement to merge into a game-streaming giant with $11B market value – something Chinese gaming giant Tencent (HKG: 0700) planned for a while now, with initial news going back to this August
Additionally, DouYu and Tencent have entered an agreement by which Tencent will assign its interest in-game live streaming brand Penguin e-Sports to DouYu for $500m, with plans for further integration of the business into the merged DouYu and Huya. This deal is expected to be closed about the same time as the merger
Both Huya and DouYu boards of directors have approved the merger agreement
In case of the successful deal, DouYu will become a wholly-owned subsidiary of Huya and delisted from The NASDAQ Global Select Market, becoming a privately-held company. СEOs of both companies will keep their positions, becoming co-CEOs of the combined entity
Huya and DouYu has agreed to pay $200m and $60m of dividends, respectively, to their shareholders, no longer than 20 days after the closure of the merger deal
It is estimated that upon the deal’s closure, Tencent will own about 67.5% of voting power in the combined company
The deal is expected to close in the first half of 2021 and is subject to customary closing conditions
? Previous M&A Deals
In August 2020, Tencent, through its wholly-owned subsidiary Image Frame Investment, acquired Leyou Technology for about $1.4B
Equally in August, Tencent acquired the controlling stake in Guangzhou-based comic and animation studio Byment and a minority stake in hyper-casual mobile game publisher Voodoo
In May 2020, Tencent, through its affiliate Image Frame Investment, acquired a 20.7% stake in Japanese PC/console game developer and publisher Marvelous for roughly $65m and became the largest shareholder
In April 2020, Tencent acquired a 15.5% stake in Huya from social media platform JOYY for $262.6m in cash, boosting its voting stake from 34.6% (acquired two years ago) to 50.1% stake
? Products
Tencent has stakes in some of China’s largest game streaming services, such as Huya Live, DouYu, Kuaishou and Bilibili
Huya is the largest Chinese live streaming platform with 168.5 million MAU reported over the Q2, 2020 with e-sports as one of the largest parts of its content library
DouYu is one of Chinese leading streaming platforms for PC and mobile and was one of the first to put a focus on e-sports streaming. The platform reported 165.3 million MAU over the Q2, 2020
SOURCES: SEC.GOV, GAMESINDUSTRY, ESPORTSOBSERVER, BLOOMBERG
