Love and kill each other ends? Fighting fish and tiger teeth merge to accelerate Tencents last laugh

category:Finance
 Love and kill each other ends? Fighting fish and tiger teeth merge to accelerate Tencents last laugh


In the view of industry insiders, the market has formed a two male situation of tiger teeth and Betta, and the total market share of the two is close to 80%. Once tiger tooth fighting fish fit together, Tencent will become the absolute overlord in the field of live game.

However, due to the merger rumors of the two companies have long been expected, and the share price was reflected last week. After the announcement, the shares of both companies fell sharply. By the end of the day, Betta fell 8.51% and Huya live fell 9.83%.

Douyu International Holdings Limited (NASDAQ: Doyu, hereinafter referred to as douyu) announced on August 10 that its board of directors had received a non binding preliminary proposal issued by Tencent Holdings Limited on August 10, proposing that douyu and Huya (New York Stock Exchange: Huya) should be merged for stock. Therefore, Huya or its subsidiaries will purchase each share of douyu Issuance of common stock (including common stock represented by ADSS). Under the proposed deal, Betta shareholders will receive an agreed number of new class a common shares issued by Tiger tooth.

The betta board said it would evaluate the proposed transaction and warned the companys shareholders and others considering trading in the companys securities that the board had just received the proposal and had no opportunity to carefully review and evaluate the proposed transaction or make any decision on the companys response to the proposed transaction. There is no guarantee that any final offer will be made, that any final agreement relating to the proposed transaction will not be enforced, or that the transaction or any other transaction will be approved or completed. Except as required by applicable law, the company does not assume any renewal obligations in connection with this transaction or any other transaction.

Huanju group announced on the same day that it had reached a final equity transfer agreement with its wholly-owned subsidiary. According to the agreement, huanju group will transfer 30 million shares of Huyas class B common shares to Tencent at a price of $810 million.

According to media reports, if the acquisition is made, the betta executive team will become the senior management team of the new company. The way to merge the fighting fish and tiger teeth is to get through the content, but the two teams operate independently, and the brand will continue to be retained. In other words, users can see two anchors through one platform at the same time, but it is not known whether the users account system is connected. During the transaction, huanju group, which hatched tiger teeth, will transfer some shares and reduce its control.

In fact, Tencent for tiger teeth and Betta merger has long been expected. On March 8, 2018, Tencent announced strategic investment in Betta and tiger teeth, with the amount of US $630 million and US $460 million respectively. On May 11, 2018, tiger tooth landed on the New York Stock Exchange. According to the prospectus, Tencents $400 million swap for a 39.8% stake in tiger tooth before the public offering. Tencent has the right to purchase additional shares at the then fair market price from March 8, 2020 to March 8, 2021, so as to achieve 50.1% of the voting rights of tiger tooth live.

In April this year, Tencent exercised the above rights. Lineninvestment limited, a wholly-owned subsidiary of Tencent, announced that it would purchase 16.5238 million shares of class B common shares from huanju group for about $263 million in cash. Tencents stake in Huya rose to 36.9%, with 50.9% of the voting rights.

It is worth noting that both Betta and tiger teeth have maintained growth. According to the second quarter financial report released by douyu on August 10, the total revenue was 2.508 billion yuan, a year-on-year increase of 33.9%. Under the non-U.S. general accounting standards, the net profit reached 323 million yuan, a year-on-year increase of 513.7%; and the first quarter financial report of Huya showed that the operating revenue and net profit also maintained growth.

Tencent becomes a big winner

Its only a matter of time before Betta and tiger teeth merge in the eyes of the industry.

Pei Pei, an Internet analyst, once divided the live broadcasting industry (including show, game and pan entertainment live broadcast) into three stages: 2005-2013 was the bronze age, with few participants, and the live game broadcasting was not the mainstream; 2014-2016 was the silver age, with mobile Internet stirring the storm, and the live broadcasting industry was placed in the forefront of the storm, and the show live broadcast moved to the mobile end, and you Drama live broadcast and pan entertainment live broadcast lead the way; 2017 has been the golden age, the dust of the hundred broadcast war has been settled, the market pattern has been established, and the game live broadcast has become the growth engine of the live broadcast market.

Among them, tiger tooth and Betta listing become the watershed of the industry. In May 2018, Huya landed in US stocks and became the first listed company in the game live broadcasting industry. In April 2019, Betta submitted a US share prospectus.

Behind the success of Huya and douyu, Tencents support is indispensable. Pei Pei pointed out earlier that Tencent is not only a giant in the global game industry, but also has increasingly obvious strategic advantages in the domestic live game industry. First of all, Tencent invested in two major game live platforms, namely douyu and Huya, as well as station B, which is influential in live game broadcasting. No matter who wins the contest between douyu and Huya, Tencent is the winner behind it.

Screenshot of douyu official website

In addition, the content copyright is the lifeblood of the game live broadcast. Only with the consent of the copyright owner, can the host and platform broadcast the corresponding content. At present, League of heroes, DNF, survival of the Jedi: big escape, peace elite (the original survival of the Jedi: stimulating the battlefield), crossing the line of fire and glory of the king have almost occupied more than 90% of the popularity of all live game platforms. These products belong to Tencent, so Tencent has absolute dominance in the content side.

According to iResearch, the revenue of Chinas live game industry will reach 20.81 billion yuan in 2019, with tiger teeth and Betta accounting for 40.25% and 35% of the market share respectively. In the view of industry insiders, the market has formed a two male situation of tiger teeth and Betta, and the total market share of the two is close to 80%. Once tiger tooth fighting fish fit together, Tencent will become the absolute overlord in the field of live game.

Source: China Securities Journal Editor in charge: Yang Bin_ NF4368