It is a done deal. Chinese investment holding behemoth Tencent has announced via a press release, that the company has acquired a majority stake in Swedish game dev firm Supercell (yup, the Clash of Clans one) foooorrr — a mammoth USD 8.6 Billion. And yes, this ofcourse marks one of the biggest such transactions to have ever taken place in the online gaming industry.
Tencent will acquire up to 84% of Supercell in a transaction valuing the Company at an equity value of approximately USD 10.2 billion (approximately JPY 1.1 trillion2).
Following the transaction, Supercell will be owned by the Consortium and by Supercell’s employees. Supercell will retain its independent operations, the headquarters will remain in Helsinki, Finland and its existing team will continue to run all operations of the Company.
Tencent further adds,
To focus on continued success, every employee is already an equity holder in Supercell and the partnership with Tencent will significantly enhance this commitment. Every employee will take part in a new long-term incentive plan, and will be able to sell their vested shares annually to Tencent.
Softbank had acquired a majority stake in Supercell in 2013, wherein it partnered with its portfolio company GungHo to acquire the same for $1.5 Billion. The company later increased its stake to the current number. The divestment however, is a part of a series of measures which the company has undertaken to unload itself from a massive debt — which stood at 11.9 trillion yen ($107 billion) at the end of March this year.
Moreover, Softbank’s smaller bets, particularly in India, like Oyo and Housing, haven’t paid off well, with the company following up multiple rounds of funding to help companies sustain. The Japanese behemoth has invested close to $200 Million in both these companies alone, with more investment being planned. The return however, has been close to minimal.
The Supercell transaction, which is currently expected to close during the third calendar quarter of 2016, is subject to customary regulatory approvals and closing conditions.
SoftBank Chairman and CEO Masayoshi Son said,
Over the life of our investment, Supercell has operated as an independent company, and its unique culture of independent teams has proven itself repeatedly. I have great respect for Tencent and its leadership in games, and believe that with its commitment to respect Supercell’s independence, Tencent represents the ideal partner to take Supercell’s business to the next level.
Talking about a renewed ‘Softbank 2.0’, Son further added,
Our decision to divest our shares is driven by our continued focus on monetization for the benefit of our shareholders and on capital structure discipline, both key pillars of our SoftBank 2.0 strategy.
For Tencent though, it is a completely different picture — and a rosy one at that. The investment holding company already has major investments in some of the top game developer globally. League of legends maker Riot Games is completely owned by Tencent, while it also has investments in some huge game publishers like Epic, Activision and Blizzard.
And apart from all of that stuff, Tencent is more popularly known for WeChat and QQ, both of whom have 853 million and 697 million active users respectively.