Tencent’s Potential $6B Video Game Merger Blocked

    • Tencent’s plan to merge Huya and DouYu s is being blocked.
    • The companies are worth a combined $6 billion.

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Tencent’s plan to merge China’s two most popular video game streaming sites — worth a combined $6 billion — is being blocked by China’s antitrust regulator, per Reuters.

The deal to merge Huya and DouYu is dissolving due to Tencent’s failure to meet the State Administration of Market Regulation’s requirements on relinquishing exclusive rights. 

Since last year, Tencent has faced antitrust concerns stemming from the company’s failure to report details of several investments and other anticompetitive practices. 

Merging Huya and DouYu would have allowed Tencent to streamline its stakes in the two companies and create its own video game live-streaming business

  • Tencent is Huya’s largest shareholder with a 36.9% stake and owns over a third of DouYu. 
  • The Chinese conglomerate would have held an 80% share of the market worth more than $3 billion, according to estimates by data firm MobTech.

In a separate deal, Tencent will be taking China’s No. 3 search engine Sogou private this month in a deal worth $3.5 billion, pending SAMR approval. 

The company will be paying a $76,000 fine to close the deal, due to its antitrust issues. 

Tencent reported $20.6 billion in revenue for Q1 2021, a 25% increase year-over-year. The strong quarter was driven by its mobile gaming business, which made up 32% of the company’s total revenue at $6.4 billion.