Is the Acquisition of Supercell Good for Tencent?

May 24, 2016

By Myn

The Chinese Internet giant Tencent is in talks with the Japanese telecommunications group SoftBank Group to purchase the majority of its stake in Supercell, the Finnish mobile game maker of Clash of Clans, Hayday and Clash Royale.

HK - Tencent screen

Even though the talks are in the early stage, a mass volume of messages about a potential M&A deal for Tencent made “Mergers and Acquisition” event to appear on Sentifi‘s Tencent screen. According to the Wall Street Journal, it is unclear whether SoftBank is in discussion with any other parties. Tencent also declined to comment on rumors.

SoftBank bought 51% stake in Supercell in 2013 for $1.53 billion. Two years later, Supercell was valued at $5.25 billion. The company’s games are free to download, but the users make in-app purchases including virtual goods and more features. Tencent is also expanding its payment business, which has about 200 million payment cards in its database. The company can offer users a seamless integration to make in-app purchases, which can be a huge boost in revenue for Supercell and open more opportunities in China’s market.

If Supercell is in the hands of Tencent, the Chinese giant will become one of the dominant publishers for global games with some of the world’s highest grossing games for mobile and PCs. Tencent is also boosting its effort for mobile games through more alliances and acquisitions such as buying minority stakes in Glu Mobile and Pocket Gems.

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