(Yicai) May 8 -- Tencent-backed China Ruyi Holdings said it will acquire video games maker C4-Games Technology from internet giant ByteDance, the parent company of TikTok. Ruyi’s shares rose.

The media and entertainment firm plans to pay CNY259 million (USD35.8 million) for the target company, it said late yesterday. Though the final price has yet to be determined, it will pay no more than CNY350 million (USD48.4 million), Ruyi said.

C4-Games specializes in two-dimensional role-playing and strategy games. It previously had success with the well-known game Houchi Shoujo in Japan, but its core business is the research and development assets for Red Alert Online, which is based on the popular single-player Red Alert created by US-based Electronic Arts.

Red Alert Online will continue to generate considerable revenue, and the project’s R&D assets will maintain high commercial value, Ruyi said.

Ruyi’s shares [HKG: 0136] closed up more than 1 percent at HKD2 (26 US cents) each in Hong Kong today, having jumped by 5.6 percent at one point. The Hang Seng Index fell 0.9 percent.

ByteDance bought C4-Games in two transactions in September 2020 and April 2021, but did not disclose the purchase price. It owns C4-Games through two units, Nuverse and Youyi Technology, which have 94.1 percent and 5.9 percent of the equity, respectively.

Ruyi has a close relationship with Tencent. The internet titan is its second-largest shareholder with a stake of nearly 22 percent. Tencent is also Ruyi’s No. 2 customer, providing 15.4 percent of its revenue last year.

C4-Games also has prior links with Tencent, having signed a deal with one of its subsidiaries in October 2021, Ruyi said. Based on that agreement, the unit provides game distribution, operation, and promotion services for C4-Games as the exclusive agent for Red Alert Online in China.

C4-Games has had relatively modest earnings in recent years, with profits after tax of CNY4.4 million (USD609,000) in 2021, falling to CNY2.9 million in 2022, Ruyi disclosed in the announcement. C4-Games had net assets of CNY344 million at the end of last year.

Editor: Tom Litting