Huya Is Studying Tencent's Douyu Merger Proposal to Create US10 Billion Esports Titan
Xu Wei
DATE:  Aug 11 2020
/ SOURCE:  Yicai
Huya Is Studying Tencent's Douyu Merger Proposal to Create US10 Billion Esports Titan Huya Is Studying Tencent's Douyu Merger Proposal to Create US10 Billion Esports Titan

(Yicai Global) Aug. 11 -- Huya's board is reportedly evaluating a proposal from Tencent Holdings to merge it with China’s other big gaming platform owner DouYu International Holdings to create a sector giant worth USD10 billion.

Huya’s board of directors will try to make the best choice for the Guangzhou-based company, its shareholders, and especially its employees, The Paper reported today, citing an internal letter written by Chief Executive Dong Rongjie.

Rivals Huya and DouYu yesterday confirmed months of speculation that Tencent, the largest shareholder in each company, is driving merger discussions. Under the share swap proposal, Huya or its units would acquire each outstanding ordinary share of DouYu whose shareholders would get an agreed number of newly issued Huya stock.

Much is at stake for a combination of the pair. China's game live-streaming market should nearly double to almost CNY40 billion (USD5.8 billion) by next year from CNY20 billion last year, according to data from iResearch. Huya and DouYu make up 80 percent of the country’s esports market, a report by MobTech showed in May. But short video platforms such as Douyin, Kuaishou and Bilibili are also vying for bigger slices of the market.

Shares of the duo slumped in New York yesterday.Huya [NYSE: HUYA] came off 9.9 percent to close at USD24.04, while DouYu [NASDAQ: DOYU] fell 8.5 percent to USD13.97.

Soon after the announcements from Huya and DouYu, Huya shareholder Joyy revealed that it had penned a deal with a unit of Tencent to sell 30 million Huya shares for USD810 million. That would result in Tencent having more than half of Huya's equity.It currently owns nearly 37 percent of Huya, with almost 51 percent of the voting rights, and 38 percent of DouYu.

Tencent's stock price [HKG: 0700] climbed 2.3 percent today to end at HKD513.50 (USD66.25), ending several days of steep declines in the wake of the Trump administration’s threat to ban its WeChat app in the US from Sept. 15.

Editor: Emmi Laine

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Keywords:   Huya,M&A,Tencent,DouYu