Tencent plans to take Douyu private after the merger was called off
“Science and technology innovation Board Daily” (Shanghai, reporter Zhang Yangyang) news, January 27, there is news that Tencent plans to douyu privatization.Tencent hopes to partner with at least one private equity firm to complete the deal, and is in talks with investment banks to close the deal this year.This news, Tencent and Douyu responded that they do not comment.Huya and Douyu are the two largest game streaming and operating platforms in China, accounting for more than 70% of the game streaming market.Among them, huya city accounted for 40%, betta fish more than 30%.Huya and Douyu have been listed in the US stock market.Tencent is behind both companies.Tencent holdings, through its affiliates, owns 36.9 percent of Huya, accounting for 50.9 percent of the company’s total voting rights.Tencent is also douyu’s largest shareholder, holding about 38.0% of douyu’s equity and voting rights.Horizontally, the three companies have strong market positions in the upstream and downstream distribution of game content.On October 12, 2020, Huya and Douyu jointly announced that they formally accepted the merger offer from Tencent, the major shareholder, to carry out a strategic merger.According to the merger agreement, Douyu and Huya will merge in a ratio of 1 Douyu ADS share for 0.73 Huya ADS share.According to the share exchange ratio, Douyu will exchange new shares at the 1:1 market value level corresponding to Huya at a premium based on the existing market value, and cancel the issued shares and ADS before the merger.Upon completion of the merger, Douyu will become a wholly-owned subsidiary of Huya and will be delisted from NASDAQ.However, the merger was blocked by regulators last July on antitrust grounds.In July 2021, the State Administration for Market Regulation announced that it would not approve the merger of Huya and Douyu submitted by Tencent Holdings after conducting anti-monopoly review of concentration of operators in accordance with the law.According to the notice, the merger of Douyu and Huya was not approved on the basis of article 28 of the Anti-monopoly Law and Article 35 of the Interim Provisions on the Examination of Concentration of Business Operators.Market supervision administration of audit think, such as teeth and bettas are merged, merged entity will make tencent separate control, further strengthen the tencent live broadcast of a dominant market position is in the game, at the same time make tencent has the ability to eliminate or restrict competition and motivation, is not conducive to fair competition in the market, may detract from the consumer benefits, is unfavorable to the network game and live healthy and continuous development market norms.Tencent’s commitment plan with additional restrictive conditions cannot effectively address the aforementioned competitive concerns.”Douyu is really cheap now. The price at the end of the year is one-tenth of that at the beginning of the year. If someone is willing to buy it, I believe Tencent really wants to directly privatize it.The personage inside course of study to “science creates board daily” reporter exclamation.From the business data, douyu in the third quarter of 2021 reported a decline in a number of core data — revenue of 2.348 billion yuan, down 7.8% year on year;A loss of 143 million yuan, year-on-year from surplus to loss.Gross profit was 278 million yuan, down 24.6% year on year.It was douyu’s fourth consecutive quarterly loss.In addition, Douyu executives are divided over whether to stick to live games as its core business or switch to more profitable live entertainment.According to the reporter, Douyu co-CEO Zhang Wenming advocated the development of pan-entertainment, will cover food, music, outdoor and other fields, also known as “show live”.However, Chairman and CEO Chen Shaojie is not interested in pan-entertainment livestreaming. He once stressed in a conference that even if he enters into other fields, it is game +, not livestreaming +.It is worth mentioning that Douyu co-founder Zhang Wenming resigned as director and co-CEO of the company last month for personal reasons.The company’s share price has also suffered in the secondary market over the past year, with poor performance figures and unclear direction.Its share price has fallen from a high of $20 at the start of the year to less than $3 today.