Fight of unequals

13 October 2020 By Robyn Mak Follow @mak_robyn

Video-games streaming site Huya is buying smaller rival DouYu in a $6 bln stock swap. The target’s investors not only receive a generous 34% premium, but also half the combined group. Given Tencent’s stakes in both, it’s a surprising but welcome result for minority shareholders.

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Chinese video-game streaming rivals Huya and DouYu said on Oct. 12 that they agreed to merge in an all-stock deal.

Under terms of the transaction, DouYu shareholders will receive 0.73 American depositary shares of Huya for each DouYu share, providing a 34.5% premium to where they closed on Oct. 9 and valuing DouYu at about $6 billion.

Tencent, which owns large minority stakes in both companies, will also inject its video-games live-streaming business into DouYu for $500 million.

Huya and DouYu shareholders will each hold approximately 50% of the combined company on a fully diluted basis.

Tencent will have 67.5% voting control of the combined company.

Huya shares closed down 11% on Oct. 12 at $22.91 while DouYu shares gained 12% to $15.68.

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