The Chinese colossus of Tencent is on the way to a new takeover. On July 10, exclusive negotiations between Tencent and Hong Kong-based Leyou Technologies began. The market value of the latter previously reached $1.4 billion.

The beginning of the negotiations became known from the official appeal of Leyou management to investors.

It also refers to the exclusive status of negotiations. For three months, Leyou will communicate about the sale only with Tencent Mobile (Hong Kong branch of Tencent).

If the companies agree on the price and conditions, and this is not at all necessary, then the entire Leyou will be at the disposal of the Chinese giant. Today, its assets include:

  • Digital Extremes (Warframe developer);
  • Splash Damage (responsible for multiplayer in Gears of War 4 and 5);
  • Athlon Games (develops an MMO game in the Lord of the Rings universe with Amazon);
  • 20% of Texas Certain Affinity (co-developer of Doom and Call of Duty);
  • the rights to develop Civilization Online and the game on “Transformers“.

It is unknown how much Tencent is willing to pay for Leyou Technologies approximately. Prior to the announcement of the negotiations, the company’s public value was about $1.1 billion. At the time of writing, it has grown to almost $ 1.2 billion. Leyou itself earned $214 million in 2019 (this is 5.9% less than in 2018). At the same time, the main asset of the company — Warframe — showed a 19.5% growth. The game earned almost a quarter of the group’s total revenue last year — $57.5 million.

Now the deal is interesting to both sides.

In recent years, Tencent has been particularly actively seeking to diversify its portfolio with Western products and reduce dependence on the local market. The acquisition of Leyou fits perfectly into this concept. Also, the purchase will give Tencnet access to the world’s largest IP.

Leyou, in turn, will receive a partner who will be able to successfully bring her online titles to the Chinese market, as well as provide the most powerful mobile expertise when working on “pocket” versions of her blockbusters.

By the way, the current news is a continuation of a long story stretching from last fall. Then the management of Leyou first announced plans to find a buyer. Only the company was worth more at that time — $1.4 billion.

At one time, the buyer was the Chinese publisher iDreamSky, a quarter of which belongs to the same Tencent Mobile. However, after several months, the companies have not come to a common denominator.

In early July, there were rumors about Sony‘s interest in Leyou. Bloomberg wrote about this. It was also known that the Chinese Zhejiang Century Huatong Group sent its proposal to Leyou.

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