Tencent to acquire majority stake in Supercell for $8.6B - Mobile World Live

Tencent to acquire majority stake in Supercell for $8.6B

21 JUN 2016

Chinese internet giant Tencent confirmed it will acquire up to 84 per cent of Supercell, including all of SoftBank’s shares, for around $8.6 billion, valuing the games company at approximately $10.2 billion.

The remaining shares will continue to be owned by Supercell’s 190 employees.

The app maker will retain its independent operations, its headquarters will remain in Finland, and its existing team will stay in control, Tencent said in a statement.

Every employee is already an equity holder in Supercell and the partnership with Tencent will “significantly enhance this commitment”, it added. Workers will take part in a new long-term incentive plan, and will be able to sell their vested shares annually to Tencent.

The transaction, expected to close during the third quarter of this year, is subject to regulatory approvals.

Masayoshi Son, chairman and CEO of SoftBank, explained that the decision to divest shares is “driven by a focus on monetisation for the benefit of our shareholders”, part of the SoftBank 2.0 strategy.

SoftBank is also selling most of its stake in Japan’s GungHo Online Entertainment for JPY73 billion ($680 million) as well as part of its holding in Chinese e-commerce firm Alibaba to cut debt and raise cash.

Ilkka Paananen, CEO of Supercell, wrote in a blog post that since Tencent’s platforms reach around a billion users with 300 million unique users playing games, Supercell will be able to bring its titles to “so many more players”.

“Also, their social platforms offer many new possibilities for our games, particularly for social play,” he said.

He added that Tencent “loves games as much as we do” and has built a hugely successful partnership with Riot Games, “a team we greatly admire and that has inspired us over the years in so many ways. Now we’ll have an excuse to call Riot and talk shop more often”.

Other than Riot, Tencent also has stakes in Activision Blizzard and Glu Mobile.

According to Martin Lau, president of Tencent, the firm is “dedicated to building long-term strategic partnerships with leading game companies”, adding that he wants Supercell to preserve its independence.

“It is important to us that Supercell stays true to its roots by sustaining its unique culture, continuing to be headquartered in Finland, and representing its home proudly,” he said.

Tencent and Supercell have also entered into marketing and publishing arrangements regarding the distribution of the latter’s games in China.

The deal marks the biggest-ever purchase of a mobile games maker, surpassing Blizzard’s $5.9 billion acquisition of King Digital Entertainment.

Supercell has a small but very popular portfolio of games. Its 2015 annual revenue increased by 36 per cent year-on-year to €2.11 billion ($2.3 billion), with EBITDA of €848 million, an increase of 65 per cent.

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Saleha Riaz

Saleha joined Mobile World Live in October 2014 as a reporter and works across all e-newsletters - creating content, writing blogs and reports as well as conducting feature interviews...More

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