Tencent Holdings Ltd. is China's largest internet company. After months of negotiations with Japanese telecoms giant SoftBank Group Corp., the Chinese company is leading an acquisition of Finnish mobile game maker Supercell worth $8.6 billion.
The Chinese internet firm will be buying 84% of Supercell which includes shares previously held by the Softbank. Prior to the Tencent deal, the Japanese telecoms firm held a 73% stake in Supercell which has an estimated market value of $10.2 billion. After the acquisition, the remainder of the shares will be owned by Supercell employees.
"The repeated success of Supercell makes it a perfect asset in the Tencent empire. The market for mobile and online gaming is saturating and, unsurprisingly, has begun to consolidate. Digitalization triggered the evolution of the games industry into a worldwide market governed by titans," said New York-based SuperData Research CEO Joost van Dreunen, as quoted by Bloomberg.
Although virtually unknown in the US, Tencent's market capitalization is currently around $207 billion- larger than other Silicon Valley titans like Oracle and Intel. Last year, online games accounted for more than 50% of the company's $15-billion revenue leading Tencent President Martin Lau to say that the company is "very bullish" on mobile gaming. Supercell has earned about $2.3 billion in revenue last year- a 64% increase from 2014.
This perspective is supported by a number of market research firms. In fact, revenue from mobile games will increase by 21% or $37 billion overshadowing console and PC games, Wall Street Journal reported.
Despite the Chinese acquisition, the Helsinki-based mobile games developer will retain its independent status within the Tencent management structure to ensure that the company stays true to its unique business culture.
"Supercell is known for its creativity, focus on player experience, and unique culture, which have enabled it to create innovative mobile games that are wildly popular globally. It is important to us that Supercell stays true to its roots by sustaining its unique culture, continuing to be headquartered in Finland, and representing its home proudly," said Tencent President Martin Lau as quoted by USA Today.
