Tencent to buy world's top mobile game firm from SoftBank
Supercell CEO Ilkka Paananen, right, and Tencent President Martin Lau pose after reaching an agreement on an acquisition deal at the Finnish company’s headquarters in Helsinki, Tuesday. / Courtesy of Supercell
China’s expanding presence looming on Korean market
By Yoon Sung-won
Tencent will acquire Supercell for $8.6 billion in a megadeal with SoftBank, according to industry insiders, Wednesday.
As the Chinese IT giant will become the parent company to the top game companies in the computer online and mobile sectors ― Supercell and Riot Games ― expectations are that Tencent will exert a dominant influence in the global gaming industry with their economy of scale.
“Yes. Tencent, the world’s biggest games company, has taken a lead to purchase SoftBank’s investment in Supercell and will be our strategic partner,” Supercell CEO Ilkka Paananen admitted in a posting on the company’s website, Tuesday.
After the acquisition, which is expected to take place in the third quarter of this year, Tencent will hold 84.3 percent of shares of Supercell. In the deal, the corporate value of Supercell has been estimated at $10.2 billion.
The deal will also benefit SoftBank as it had purchased 51 percent of Supercell for only $1.53 billion in 2014 and boosted its share to 73 percent a year later.
Established in 2010, the Finnish mobile game company has provided “Clash of Clans,” one of the most sought-after mobile games in the world as well as “Hay Day,” “Boom Beach” and “Clash Royale.” In total, it has drawn more than 100 million daily active users globally, and posted $2.43 billion in sales last year.
“Masa, the founder of SoftBank and our chairman, told me that if we were able to find a new partner, he would like to sell SoftBank’s shares in Supercell to finance what he called SoftBank’s 2.0 transformation strategy,” Paananen said.
The Supercell CEO said that Tencent has agreed that Supercell will continue to be operationally independent as it was under SoftBank’s ownership.
“They understand that our unique culture of small and independent teams is what makes Supercell,” he said. “Also, our headquarters will stay in Helsinki and we will pay our taxes in Finland.”
Tencent has been known to allow independent management of Riot Games, provider of one of the world’s most-played computer online game “League of Legends,” since acquiring 100 percent of its share in 2011.
Meanwhile, concerns are escalating in the Korean game industry that Tencent’s acquisition of the world’s top mobile game company may speed up the penetration of Chinese game businesses and their titles here.
“There are concerns that Korean game businesses will face tougher challenges to compete not only on the global scale but also locally in terms of economies of scale because Chinese games are already expanding their presence,” a source from a major Korean game company said.
Meanwhile, another industry insider expected that the acquisition will not immediately escalate competition.
“The competitive landscape in the gaming industry will not change much as Tencent will make its new subsidiary run independently instead of coming to the center stage as a platform operator,” he said.