Chinese technology and entertainment conglomerate Tencent has launched plans to merge the country’s two top livestreaming platforms, Huya Inc. and DouYu International Holdings Ltd, which have an estimated combined worth of USD$10 billiion and some 300 million users.
Tencent is the largest shareholder in each company and has sent its merger proposal to their respective boards.
A preliminary non-binding proposal letter from Tencent Holdings Limited proposing that Huya and DouYu International Holdings Limited enter into a stock-for-stock merger to be effected pursuant to applicable laws, as a result of which Huya or its subsidiary would acquire each outstanding ordinary share of DouYu, including ordinary shares represented by American depositary shares, in exchange for a to be agreed number of newly issued Class A ordinary shares of Huya, including ordinary shares represented by American depositary shares.
According to the proposal letter, Tencent would support the Transaction as a shareholder of each of Huya and DouYu, and would be willing to participate in the Transaction in such manner and on such terms and conditions as to be further discussed and mutually agreed upon.
Tencent has also entered into a share transfer agreement with JOYY Inc (owner of YY, a major Chinese video-based social network), and a separate share transfer agreement with Mr. Rongjie Dong, the chief executive officer of Huya, pursuant to which Tencent will purchase from JOYY Inc. 30,000,000 Class B ordinary shares of Huya and from Mr. Rongjie Dong 1,000,000 Class B ordinary shares of Huya. According to the proposal letter, subject to the satisfaction of customary closing conditions, the transfers under these agreements will be consummated on or before September 9, 2020.
The boards of Huya and DouYu will review and evaluate the Proposed Transaction which will be subject to regulatory approval.
Meanwhile, despite reports of Tencent purchasing SE Asian OTT provider iFlix, no official statement has been released.