(Yicai Global) Oct. 13 -- Huya and Douyu International Holding, China's two largest live streaming platforms, which are both backed by tech giant Tencent Holdings, have entered into an agreement to merge, they announced yesterday.

Douyu will delist from the Nasdaq Stock Market and become a wholly-owned Huya unit after the merger concludes. Its largest shareholder Tencent will assign its live-streaming business, Penguin e-Sports, to Douyu to integrate with its live streaming business for USD500 million.

Huya [NYSE:HUYA] closed 11.17 percent down at USD22.91 yesterday, while Douyu [NASDAQ:DOYU] rose 12 percent to USD15.68.

Tencent's voting power in the combined company held through its affiliates is expected to be 67.5 percent after it buys additional Huya and Douyu shares.

Dong Rongjie and Chen Shaojie, current CEOs of Huya and Douyu, will be co-chief executive officers of the consolidated entity and will join the new firm's board along with Huya directors.

The two companies operate game live-streaming platforms with a combined market share of about 80 percent. They had over 160 million monthly active users in the second quarter and revenue of over CNY2.5 billion (USD372 million). They are however coming in for increasing competition from Beijing ByteDance Technology’s popular TikTok short video app, known as Douyin in China.

The merger, like others between industry leaders, confronts many challenges such as anti-monopoly inquiries and integrating disparate teams, an analyst said.

Editor: Ben Armour