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China’s two largest esports streaming platforms announce merger

Written by Wency Chen Published on 

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Tencent will have 67.5% of the voting power in the combined livestreaming giant.

Gaming-centric livestreaming platforms Huya (NYSE: HUYA) and Douyu (NASDAQ:DOYU) have entered into the Tencent-initiated merger plan, which is expected to close during the first half of 2021, the two companies announced today. According to the merger plan, Huya will acquire all the outstanding shares of Douyu through a stock-for-stock merger.

If the transaction is completed, the previous shareholders of Huya and Douyu, respectively, will each hold approximately 50% of the shares of the combined company on a fully diluted basis. Tencent Holdings  (HKSE: 0700), which proposed the marriage of Douyu and Huya in August, will control 67.5% of voting rights in the combined company held through its affiliates.

Douyu will delist from the Nasdaq stock exchange and become a wholly-owned subsidiary of Huya. Dong Rongjie, the current Huya CEO, and Chen Shaojie, Douyu’s CEO, will be co-CEO and of the new combined company and sit in the boardroom. JOYY, Huya’s parent company and significant shareholder, has agreed to the merger plan.

Huya’s board also approved an aggregate cash dividend of USD 200 million to the holders of ordinary shares of Huya while Douyu approved a cash dividend in an aggregate amount of USD 60 million. Announcements regarding details of this matter will come in due course. Linen Investment Limited, a wholly-owned subsidiary of Tencent will purchase 1,970,804 Class B ordinary shares of Huya from Dong and his affiliates, and purchase 3,703,704 Douyu shares from Chen and his affiliates.

Douyu stock surged 15.43% to USD 16.3 per share in pre-market hours, while Huya’s dropped 6.94% to USD 24. Tencent’s Hong Kong-listed stock closed at HKD 557, up 3.24% from the prior trading day.

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