UPDATE: Tencent Is Close To Acquiring Leyou For +$1.3B Estimated Valuation
💵 Acquisition
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Chinese gaming giant Tencent (SEHK: 700) is getting close to acquire Hong Kong-based game developer and distributor Leyou Technologies (HKG: 01089), though the agreement is still yet to be announced
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On July 10, 2020, the companies agreed on three months of exclusive M&A talks. If the deal happens, it could be over $1.3b, since the current market value of Leyou is about $1.2b and there might be some premium to the current market price
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Leyou’s major shareholder with a 52% stake in the company Charles Yuk plans to sell all his shares by the end of December 2020
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Anonymous sources say that companies discuss an offer price in the range of $0.43 to $0.44 per Leyou share
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Among many bidders interested in Leyou acquisition, were Sony and two companies backed by Tencent: iDreamSky Technology Holdings and Zhejiang Century Huatong Group, as well as some other private equity firms
🎲 Products
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Leyou owns several game studios, such as Digital Extremes, Splash Damage, Kingmaker and Radiance Games
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Digital Extremes has developed multiplayer shooter Warframe
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The game has about 50m registered users
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In the first half of 2020, Warframe saw a 15.5% growth of registered players
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Leyou’s Splash Damage studio has worked with Microsoft on “Gears Tactics” game, that came out this April on PC and gained generally positive reviews
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Currently, Leyou finishes the work on a multiplayer combat game Outcasters, developed specially for Google Stadia. The game is planed to be released this fall
📈 Financial Performance
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In 2019, Leyou reported $214.2m Revenue (-5.9% YoY growth) and $8.4m Loss
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Suprisingly, the company revenue for the first half of 2020 accounted for $90.7m, demonstrating a 14.2% decrease compared to the the first half of 2019 ($105.7m). According to the Leyou, the main reasons for such decrease were COVID-19 impact and shutdown of the company’s overseas studios
💵 Company Ownership
The largest shareholder of Leyou is Yuk Kwok Cheung holding ~52% of all shares
SOURCES: BLOOMBERG, PCGAMEINSIDER
