Tencent in exclusive talks to buy Hong Kong gaming firm Leyou

Tencent in exclusive talks to buy Hong Kong gaming firm Leyou

A pedestrian walks past Tencent Holdings’s headquarters in Shenzhen, China. Qilai Shen | Bloomberg | Getty Images Chinese tech giant Tencent is in exclusive talks to acquire Leyou Technologies , the Hong Kong-listed games developer announced on Friday. Leyou has a number of subsidiaries which make video games. It […]

The exclusivity agreement means that Leyou and Yuk won’t be able to negotiate with another potential buyer in the next three months while the Tencent talks are ongoing. Leyou said the negotiations were still in progress and that there was no certainty the talks would lead to a binding deal.

In the past few years, Tencent has bolstered its gaming portfolio via investments in other firms. For example, it acquired most of Finnish mobile game maker Supercell in 2016 and took a stake in “Fortnite” creator Epic Games in 2012.

An acquisition of Leyou would help Tencent further expand the number of games under its huge umbrella as it faces increasing competition from Chinese rival NetEase.

NetEase, which is listed in the U.S., carried out a secondary listing in Hong Kong, last month, raising 21.09 billion Hong Kong dollars ($2.7 billion). That money will be put toward international expansion which means NetEase and Tencent will go head-to-head in the global games market.

“Tencent continues its global expansion efforts with acquisitions of studios that augment the company’s exposure in PC, mobile and console development for China and for global markets,” analysts at Niko Partners wrote in a note. “Leyou would be part of this expansion as it is a domestic company that already owns multiple domestic and overseas game developers.”

The news comes after a Bloomberg report last week said that Sony was considering a bid for Leyou. The Japanese gaming giant recently announced a $250 million investment in Epic Games.

Sony has been aggressive in bolstering its access to key intellectual property ahead of the launch of its flagship PlayStation 5 console slated to be released later this year. Last month, the firm unveiled the design of its next-generation device and a line-up of well-known games that will be released.

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