Tencent buys Clash of Clans game studio

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Tencent buys Clash of Clans game studio

Tencent Holdings will lead a group buying control of gamemaker Supercell for $8.6 billion, getting its hands on some of the industry’s most popular mobile titles.

A group led by China’s largest internet company is buying 84 percent of the stock, including shares held by SoftBank Group as well as current and former employees. The deal values the Finnish gaming house at about $10.2 billion and adds chart-toppers Clash of Clans and Hay Day.

Tencent, Baidu and Alibaba Group Holding have embarked on an acquisition spree, seeking content and technology in their tug-of-war over the world’s largest internet population.

The Supercell purchase may galvanize a wave of overseas deals as the trio’s ambitions expand beyond a now-slowing home market - till now, the triumvirate has focused much of its spending domestically.

“The repeated success of Supercell makes it a perfect asset in the Tencent empire,” said Joost van Dreunen, CEO of SuperData Research, a New York-based market researcher. “The market for mobile and online gaming is saturating and, unsurprisingly, has begun to consolidate.

Digitalization triggered the evolution of the games industry into a worldwide market governed by titans.”

SoftBank rose 1.4 percent to 5,842 yen in Tokyo before the deal was announced. The shares have declined 4.8 percent this year. Tencent gained 1.3 percent in Hong Kong.

At a $10 billion valuation, Supercell’s price tag outstrips the $5.9 billion Activision Blizzard agreed to pay for Candy Crush Saga studio King Digital Entertainment in 2015.

Supercell’s mobile games employ a “freemium” model where apps cost nothing to download but users can buy perks or special items to gain an edge. That approach has created a string of successes from King’s Candy Crush to Clash of Clans, a mobile battle-strategy game that’s consistently among the top-grossing. Supercell’s revenue surged 36 percent to 2.1 billion euros ($2.4 billion) in 2015. Bloomberg
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