Tencent Holdings, one of the largest internet companies in the world, is reportedly offering $8.6 billion for a 84.3 percent stake in Supercell, the makers of the popular mobile game Clash of Clans. The holding company values the Finnish game developer at $10.2 billion. Clash of Clans was the highest grossing mobile game by revenue last year, raking in $1.35 billion, according to the Wall Street Journal source SuperData Research.
The purchase will occur in stages and is in discussions with co-investors to join in, Tencent said in a statement. The deal is expected to close in the third quarter of this year, pending regulatory approval.
The $10 billion valuation is proof of Supercell's incredible growth. The company was valued at $5.25 billion last year, according to the Wall Street Journal. The stake Tencent will be taking over was previously owned by Japanese telecommunications company SoftBank, which bought a 51 percent stake of Supercell in 2013 for only $1.53 billion. Supercell's incredibly growth might become even more rapid with new opportunities in China.
"China is home to more gamers than any other country," Ilkka Paananen, CEO of Supercell, wrote on the company's website. "Tencent's platforms reach around a billion users (yes, a billion!). And, they have around 300 million unique users playing games on their platforms. What this means for us is that together with Tencent, we can bring our games to so many more players. Also, their social platforms offer many new possibilities for our games, particularly for social play. All of this is very exciting!"
For Tencent, the purchase will allow it to continue its growth in the PC and mobile gaming industries. In 2011 the company acquired a majority stake in Riot Games, the makers of League of Legends. Last year they bought up the remaining equity of the developer. They also have investments in Activision Blizzard, Inc. and Glu Mobile.
And while the deal may still be in its early stages, it certainly sounds like a good business strategy to add Supercell's 100 million daily players to the 300 million playing on Tencent's platforms.