Tencent buys 'Clash of Clans' maker Supercell from SoftBank (updated)
21/06/2016 12:54
(Adds details, Tencent comment)
By Paul Carsten, Ritsuko Ando and Jussi Rosendahl
BEIJING/TOKYO/HELSINKI, June 21 (Reuters) - China's biggest
gaming group Tencent Holdings Ltd 0700.HK is to buy a majority
stake in Finland's Supercell, which makes the 'Clash of the
Clans' mobile game, from SoftBank Group Corp 9984.T , in a deal
valued at roughly $8.6 billion.
The purchase will expand Tencent's interests overseas, as
the Chinese video game and social network group still relies
mainly on its home market even though it has stakes in various
foreign studios like Epic Games and Riot Games.
Tencent will acquire about 84.3 percent of Supercell via a
wholly-owned consortium, including all of SoftBank's 72.2
percent stake, it said on Tuesday. The sale is the biggest ever
deal in gaming M&A.
The consortium will open up to co-investors, though Tencent
expects to maintain a 50 percent voting interest, it said.
Supercell, also creator of 'Boom Beach' and 'Hay Day', has a
handful of successful games and gets a significant amount of
revenue from in-game purchases, helping it to avoid the problems
faced by the likes of rival Rovio Entertainment, which has
failed to create a new hit game since its 2009 launch of Angry
Birds. urn:newsml:reuters.com:*:nL5N16H2A9
The Finnish company will now receive Tencent's backing as it
pushes more aggressively into China's large online gaming
market.
With just 180 employees, Supercell had pre-tax profit of 880
million euros with sales of 2.1 billion euros ($2.38
billion)last year, putting the six-year-old firm into the list
of largest Finnish companies measured by earnings.
Clash of Clans, the world's No.1 grossing mobile game last
year, is a war strategy game in which players build fortresses,
form clans and battle it out with other clans in a
Medieval-style fantasy world.
Supercell's current management will keep their operational
independence and the company will remain in Finland, Tencent's
statement said.
For SoftBank, the Tencent deal will mark its third major
asset reshuffle in the past month. Softbank is seeking to
bolster its finances following its 2013 acquisition of a
majority stake in struggling U.S. wireless carrier Sprint Corp
S.N . urn:newsml:reuters.com:*:nL4N18S51V
SoftBank said the latest sale would yield a return of around
2.9 times its original investment. It expects to book a 600
billion yen ($5.74 billion) pre-tax profit this financial year
from the sale, it said.
The Japanese media and telecoms company this month said it
would sell $10 billion worth of shares in Chinese e-commerce
giant Alibaba Group Holding Ltd BABA.N to cut debt, as well as
a decision to sell its stake in GungHo Online Entertainment Inc
3765.T back to the mobile game maker for 73 billion yen.
In a surprise move, SoftBank said on Tuesday President
Nikesh Arora would resign as of its Wednesday shareholder
meeting, less than two years since he joined the group.
urn:newsml:reuters.com:*:nL4N19D3G7
Tencent said it expected the Supercell deal to close in the
third quarter of 2016. The Chinese company made 32 billion yuan
($4.86 billion) revenues in the first three months of 2016, of
which over half came from gaming.
($1 = 6.5807 Chinese yuan renminbi)
($1 = 0.8826 euros)
(Reporting by Paul Carsten; Additional reporting by Jussi
Rosendahl in Helsinki; Editing by Muralikumar Anantharaman and
Jane Merriman)
((paul.carsten@thomsonreuters.com; +86 10 6627 1299; Reuters
Messaging: paul.carsten.thomsonreuters.com@reuters.net /
Twitter: @PaulCarsten))
Keywords: SUPERCELL M&A/TENCENT HOLDINGS