Chinese game-streaming platform DouYu today announced that its Board of Directors has received a preliminary non-binding proposal letter from Tencent for combination with Huya.
The letter, dated August 10, 2020, proposes that DouYu and Huya enter into a stock-for-stock merger, as a result of which Huya or its subsidiary would acquire each outstanding ordinary share of DouYu.
Pursuant to the Proposed Transaction, shareholders of DouYu will receive a to be agreed number of newly issued Class A ordinary shares of Huya for their respective DouYu shares, the company said.
The Board plans to review and evaluate the Proposed Transaction while cautioning the company's shareholders has not had an opportunity to carefully review and evaluate the proposed transaction or make any decision with respect to the Company's response to the Proposed Transaction.
Bloomberg reported Wednesday citing people familiar with the matter as saying that Tencent is driving discussions to merge the country's biggest game-streaming platforms Huya and DouYu.
Tencent in talks to merge game-streaming platforms Huya and DouYu
Tencent has been discussing such a merger with the duo over the past few months, although details have yet to be finalized, the report said, adding Tencent is seeking to become the largest shareholder in the combined entity.
Tencent now owns a 37% stake in Huya and 38% of DouYu. A deal would create an online giant with more than 300 million users and a combined market value of $10 billion, cementing Tencent's lead in Chinese games and social media, the report said.
Huya and DouYu would keep their respective platforms and branding while working more closely with Tencent's own esports site eGame, according to the report.
Earlier today, DouYu announced its second-quarter 2020 financial report, showing that total revenue reached $2.508 billion in the second quarter, up 33.9 percent year-on-year.
The company's gross profit reached $523 million in the second quarter, an increase of 73.7 percent year-over-year. Non-GAAP net income reached $323 million, an increase of 513.7 percent year-over-year.
DouYu shares went up by 1 percent in pre-market trading.
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