Leyou, the parent company that owns a majority stake in Warframe developer Digital Extremes and Gears Tactics developer Splash Damage, is looking increasingly likely to be bought out by Tencent. On July 10, Leyou announced a trading halt, “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information of the Company.”
Initially, rumors persisted that Sony was the likely buyer, but the Leyou board released another statement indicating that they were entering into an agreement with Tencent. “The Board announces that on 10 July 2020 (before trading hours), Mr. Yuk and the Company entered into an exclusivity agreement (the ‘Privatization Exclusivity Agreement’) with Tencent Mobility Limited (the ‘Potential Acquiror’), a wholly-owned subsidiary of Tencent Holdings Limited,” the announcement reads.
This does not make the deal a definite thing, but it means that if Leyou sells within the next three months, it will be to Tencent. “There is no assurance that any negotiations mentioned in this announcement will either materialize or eventually be consummated and the negotiations may or may not lead to a possible acquisition and privatization of the Company,” the statement clarifies.
Leyou also owns their own publishing label, Athlon Games, which publishes Samurai Shodown and is a publishing partner of LCG Entertainment, which has revived several Telltale Games properties following the company’s collapse. Athlon is also currently working on the Lord of the Rings MMO with Amazon. All of this would likely make the company attractive to Tencent.
VentureBeat posits that Tencent, which has a huge presence on mobile devices, is likely looking to replicate its successes on the PC market. In a statement provided to the site, Niko Partners analyst Daniel Ahmad says that because Leyou “owns a number of studios that have expertise in global online free-to-play game development for console and PC,” they would likely be useful to Tencent’s efforts to expand overseas.
Tencent recently announced that it was opening a new studio, led by a former Rockstar dev. It is also working on Pokemon Unite, a new Switch/mobile Pokemon MOBA. The company also has investments in Epic, Riot, Ubisoft, Activision, Grinding Gear, Supercell, Platinum, Yager, Frontier, and Funcom, among others.
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