General Gaming News

Tencent Acquires Leyou Technologies For Around $1.4B

Warframe promo codes for July 2020

Hong Kong-based game developer and distributor Leyou Technologies, the parent of Digital Extremes, has been acquired—Digital Extremes are the studio behind Warframe—by Chinese gaming giant Tencent. The two will merge through Tencent’s wholly-owned subsidiary Image Frame Investment. The total price of the buyout is reported at around $1.4B.

There’s still an approval process that both companies are subject to before the sale is approved. Expect some auditing and internal shuffling within the two firms for a bit.

The rather shocking part is that Tencent simply leveraged internal cash reserves to make the purchase. It’s not a leveraged buyout or any kind of debt onboarding, purely trading of cash reserves. It’s kind of crazy to think that Tencent has that much liquidity to leverage in this manner.

In 2019, Leyou reported $214m Revenue (-5.9% YoY growth) and a $6.5m Net Loss. It’s likely that this shrinkage caused an eager Tencent to pounce when the company’s outlooks were weaker. This deal will mean that Leyou Technologies will delist from public stock exchanges and become a privately-owned entity going forward. Leyou and controlling shareholder Charles Yuk entered into talks with Tencent earlier this year, and the deal was often reported as near-certain in the press.

Leyou has a number of subsidiaries which make video games. It is most well-known for Warframe.

Tencent as a company has been explosively expanding these last few years. From its headquarters in Shenzen, China, the company has taken over multiple publishers and countless developers. They’ve built to a massive 60,000 employees across all of their subsidiary companies. The company acquired a controlling stake in Finnish mobile game maker Supercell in 2016, while also snapping up a portion of Epic Games in 2016. Tencent has been very aggressive in getting their hands on popular games as well, gaining a stake in Grinding Gear Games and Path of Exile too.

Tencent has also acquired a stake in Spec Ops: The Line developer Yager this year. They even managed to grab the rights to System Shock 3 at one point. There are far too many acquisitions to list.

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