Tencent is moving closer to a deal to buy SoftBank’s 73.2 per cent stake in Finnish app maker Supercell for $6.6 billion, valuing the Clash of Clans creator at more than $9 billion, Reuters reported.
Tencent is China’s biggest social network and online entertainment company and the deal could be the biggest-ever purchase of a mobile games maker, surpassing Blizzard’s $5.9 billion acquisition of King Digital Entertainment, the report said.
It added that the move would help Tencent boost both its revenue and its research and development capabilities.
Tencent already owns Riot Games, and has a stake in Activision Blizzard and Glu Mobile.
Back in March, the Chinese giant announced its smartphone games generated CNY21.3 billion ($3.3 billion) revenue in 2015, an increase of 53 per cent year-on-year, and said that “looking forward, we aim to broaden smartphone game activities in China into new game genres”.
Tencent, which is in late-stage talks with SoftBank, is in discussions with several financial investors, including Hillhouse Capital Group, to join in the purchase as co-investors, The Wall Street Journal reported, and an agreement could be announced next week, although it is not a done deal.
What’s more, any buyer would have to agree to give Supercell’s founders control over the company, and wouldn’t have the ability to launch an initial public offering or get rid of current management, the report said.
In May it was reported that Tencent’s president, Martin Lau, and chief strategy officer, James Mitchell, flew to Helsinki to convince Supercell’s founders, who have veto power, to support a sale.
Supercell has a small portfolio of games but its 2015 annual revenue increased by 36 per cent year-on-year to €2.11 billion ($2.3 billion), with EBITDA of €848 million, an increase of 65 per cent.
SoftBank bought a 51 per cent stake in Supercell for $1.53 billion back in 2013, and raised its stake to 73 per cent last year for an undisclosed amount.
SoftBank is also selling most of its stake in Japan’s GungHo Online Entertainment for JPY73 billion ($680 million) and part of its holding in Chinese e-commerce firm Alibaba to cut debt and raise cash.
SoftBank’s portfolio of videogame companies has come under scrutiny, as a sale of such assets would improve its balance sheet. It lists Supercell as an “investment asset”.
Comments