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Leyou Technologies confirms ongoing acquisition talks with Tencent

If completed, Tencent will privatise parent of Warfare developer

Tencent has been confirmed as the potential buyer for Chinese games firm Leyou Technologies.

The games giant was among several interested parties, including mobile publisher iDreamSky, Leyou rival Zhejiang Century Huatong Group and reportedly Sony Corporation.

Leyou has since announced that it is in exclusive talks with Tencent subsidiary Tencent Mobility.

Discussions began on July 10 and have been structured as such that Leyou will only be talking about a potential acquisition with Tencent.

The talks will last three months, now approaching the final month, but can be called off early if both parties agree there will be no sale.

Leyou has been posting regular updates through its investor relations website, with the most recent significant announcement being that Tencent had begun a due diligence review on August 7.

Leyou is listed on the Hong Kong Stock Exchange and has continued trading, with updates on significant dealings under rule 22 of the Takeovers Code. The most recent of these was yesterday, indicating talks with Tencent are still ongoing.

Both Leyou and Tencent note that the negotiations are no guarantee that a deal will be made.

However, if an acquisition does take place, Tencent Mobility plans to privatise Leyou Technologies.

Leyou is best known in the games industry as the parent of Warframe developer Digital Extremes. It also owns UK work-for-hire studio Splash Damage and publisher Athlon Games, which is currently working on a Lord of the Rings game with Amazon.

News that Leyou was up for sale first emerged last year when controlling shareholder Charles Yuk revealed he was in talks with iDreamSky about selling a majority stake.

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