By Kim Yoo-chul
Chinese internet firm Tencent has been in discussions with Bluehole to acquire the latter's stake, sources who are familiar with the matter said Monday.
“Tencent approached Bluehole to purchase its stake. Terms of details have yet to be fixed, but they've seen substantial progress about the deal,” an official at a Seoul-based private equity fund (PEF) said.
Bluehole is the parent firm of PUBG, which developed the best-selling video game “PlayerUnknown's Battlegrounds.”
“Venture capitals owning stakes in the Korean game company want to sell their stakes before the firm goes public. The Chinese tech company was picked up as the preferred negotiator for the deal as it suggested a higher acquisition price than others such as Microsoft,” said the source, asking not to be identified citing the sensitivity of the issue.
Credit Suisse will serve as financial adviser to manage the deal with potential investors and existing shareholders. A Bluehole spokesman declined to comment.
Reports say Tencent was leading a group of investors to acquire as much as a 10 percent stake in Bluehole for an estimated $500 million, valuing the Korean firm at more than $5 billion. Bluehole is a creator of MMORPGs and mobile games.
Tencent invested 70 billion won last year to acquire a stake under five percent in Bluehole. Tencent has stakes in Kakao and Netmarble.
“Before going public, Bluehole hopes to win financial backing from strategic investors rather than financial investors. It's still unknown how many stocks Tencent is planning to acquire. There are lots of issues that should be addressed before completing the deal,” said another PEF source, citing that Chinese regulators haven't approved the licensing deal between Tencent and Bluehole to bring Bluehole's games to the Chinese market.
The deal, if Chinese regulators approve, will make Tencent the second-largest shareholder in Bluehole.
Tencent is making efforts to diversify and expand its pipeline of content for the global game market. The Chinese firm already owns a number of online multiplayer games including “War of Zombie.”