Tencent Buys Supercell for $8.6 Billion
The ultimate pay-to-win isn’t Clash of Clans or Clash Royale but it’s for Clash developer Supercell itself. Chinese investment company Tencent has reportedly purchased a majority share in the mobile game developer for a reported price of $8.6 billion which would value the company at around $10.2 billion.
Reports say that Tencent will acquire 84.3% of the company in stages and bring in co-investors to help fund the transaction. The majority of the shares will be bought from SoftBank, a Japanese bank, who currently owned 73.2% of Supercell. Shares have also been purchased from current and former employees of Supercell. The acquisition shouldn’t be a surprise. Tencent is a pretty big player in the games industry. They own Riot Games, makers of League of Legends, and hold minority shares in Activision Blizzard, Epic Games and Robot Entertainment.
The Wall Street Journal reports that SoftBank is trying to offload assets to pay for its $80 billion in debt. It’s currently trying to sell off nearly $8 billion in its shares of Chinese commerce website Alibaba. Tencent, on the other hand, reportedly has about $16 billion in cash so it can easily afford to buy Supercell in cash. However, WSJ also says that a source close to the deal tells them that Tencent will raise debt against Supercell’s assets to pay for the purchase. It’s not unusual but it also puts pressure on Supercell to be able to help pay down that debt.
Tencent’s track record puts it at the top of the gaming sectors that it buys into. League of Legends tops the PC market in terms of revenue while Supercell was recently at the mobile gaming markets in terms of revenue. Now, they find themselves in a battle for top of the charts with Machine Zone whose games include Mobile Strike and Game of War.
Historically, Tencent doesn’t seem too interested in meddling with the core operations of the companies it owns which is good for people who love Supercell’s games but bad for people who are tired of the endless grind that seems to be a core mechanic of free-to-play and pay-to-win mobile games. We might not even see more games get pushed out because it’s not like Tencent has put much pressure on Riot to push out more purchaseable content for League.