China's Tencent buys 'Clash of Clans' maker Supercell for $8.6 billion

Tue Jun 21, 2016 12:07pm EDT
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By Paul Carsten, Jussi Rosendahl and Ritsuko Ando

BEIJING/HELSINKI/TOKYO (Reuters) - China's biggest gaming group Tencent Holdings Ltd (0700.HK: Quote) is to buy a majority stake in 'Clash of Clans' mobile game maker Supercell from SoftBank Group Corp (9984.T: Quote) 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.

Finnish mobile games maker Supercell will now have Tencent's backing as it pushes more aggressively into China's online gaming market. For Japanese internet and telecoms group SoftBank, the Tencent deal will mark its third major asset reshuffle in the past month.

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 one of the world's biggest ever gaming deals.

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 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.

With just 180 employees, Supercell had pre-tax profit of 880 million euros and sales of 2.1 billion euros ($2.38 billion) last year, putting the six-year-old firm among Finland's biggest companies measured by earnings.

Independent financial analyst Richard Windsor said: "Clash of Clans has been constantly in the top 5 grossing apps ... for a very long time, making this a great platform (for Tencent) from which to begin building a position in developed markets."   Continued...

Finnish game company Supercell Co-Founder and CEO Ilkka Paananen (L) and Martin Lau, President of Tencent, pose while meeting with the press in the company's headquarters in Helsinki, Finland June 21, 2016. Lehtikuva/Seppo Samuli/via REUTERS