$8.6 Billion Mobile Game Deal Confirmed As Tencent Prepares To Buy Supercell
Chinese investment company Tencent Holdings will be making a mobile game deal with app developer Supercell. Tencent is planning to invest a whopping $8.6 billion in Supercell, while simultaneously taking over shares from Japan-based telecommunications company SoftBank Group.
Tencent will be buying SoftBank’s 73 percent share in Finnish game-makers Supercell, eventually becoming the leading stakeholder with 84 percent of the company. Once the mobile game deal between the companies is complete, Supercell will be valued at $10.2 billion, roughly double their estimated worth in 2015 (about $5.25 billion).
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— Boom Beach (@BoomBeach) May 18, 2016
Supercell is known for some of the most popular gaming apps out there today–Clash of Clans, Hay Day, and Boom Beach. In fact, their user base recently reached 100 million people.
The games have been performing well for Asian audiences, which is probably one of the reasons Tencent was prompted to take action and strike while the iron is hot.
— Hay Day (@hayday) May 17, 2016
Not to mention, SoftBank’s current situation provided an opportunity.
SoftBank has been plagued by financial woes recently, and selling its Supercell shares is just one attempt to ease that. The company has seen a steady decrease in profits, and its debt has risen to $80 billion. That debt is attributed to its acquisition of the mobile carrier Sprint, which apparently hasn’t brought in enough profit to warrant the acquisition.
In addition, Nikesh Arora has stepped down as SoftBank President. According to reports, the former Google executive’s departure comes for a number of reasons. He expected to succeed CEO Masayoshi Son as CEO, but Son recently announced that he’ll be remaining in his position for at least another five to 10 years. Investors haven’t been thrilled with Arora either, though, criticizing investment decisions that have failed to perform.
SoftBank Group stands to make about $7 billion after selling their Supercell shares.
This won’t be Tencent’s first foray into a mobile game deal. Last year, it bought Riot Games (creators of League of Legends) for more than $230 million and now owns a majority stake in that company as well.
Supercell co-founder and CEO Ilkka Paananen released a statement about the agreement between his company and Tencent.
“We want Supercell to be the world’s best place for creative people to create games. At the same time, this new partnership offers us exciting growth opportunities in China, where we will be able to reach hundreds of millions of new gamers via Tencent’s channels.”
— Ilkka Paananen (@ipaananen) June 21, 2016
In a blog post on Supercell’s official website, Paananen went into some more detail about the “next chapter.” He made it clear that Tencent will not be taking over all operations after this deal is complete and that Supercell headquarters would remain in Helsinki, where it all began for the team of developers in 2010.
“First, we have agreed with Tencent that Supercell will continue to be operationally independent, exactly as it was under SoftBank’s ownership. They understand that our unique culture of small and independent teams (or ‘cells’ as we call them) is what makes Supercell. We want Supercell to continue to be the world’s best place for creative people to create games. Also, our headquarters will stay in Helsinki and we will pay our taxes in Finland. All of this is very important for us.”
The post continued to describe their eagerness to reach millions of gamers in the Asian market, as well as the love that the two companies share for gaming as a whole.
Before the Tencent and Supercell partnership, another was the biggest mobile game deal of the year so far. In February, gaming giant Activision Blizzard bought King Digital, famous for the popular app Candy Crush Saga, for $5.9 billion. Candy Crush remains in the top 10 ranking for mobile games in the United States, and Activision claims that their acquisition of King expanded their user base to 500 million.
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