Tencent'S "Scheming" Battle Fish

Douyu and Huya, the pair of "enemies", are about to become a family. Tencent is undoubtedly the biggest promoter behind this.

On the evening of August 10, douyu announced that the board of directors had received the non binding preliminary proposal issued by Tencent on August 10, proposing that douyu and Huya should be merged by way of share exchange.

Under the proposal, tiger tooth or its subsidiaries will acquire the issued common shares of douyu, and the shareholders of douyu will receive an agreed number of new class a common shares issued by Tiger tooth in exchange for their respective Betta shares.

In response, Betta said the Board plans to review and evaluate the potential deal. On August 11, Dong Rongjie, CEO of Huya, also sent an internal letter to all Huya employees, saying that the company's board of directors has not made any decision, and will carefully review and evaluate the proposal, and will make the best choice for the company, shareholders, and employees in particular.

Although both douyu and Huya said they would like to evaluate the merger proposal, a person familiar with the matter told the 21st century economic news that the parties had already begun negotiations on the merger. Now Tencent has officially issued the proposal, which means that all parties have reached an agreement, so the merger is a foregone conclusion.

Tencent has been brewing for a long time

The merger process of Betta and tiger teeth has been promoted, and April this year is an important node. At that time, Tencent purchased 16.5238 million ordinary shares of Huya at a price of $262.6 million. After the transaction was completed, Tencent became the largest shareholder of Huya with 50.1% voting rights.

Different from Betta, Huya is the product hatched within huanju group. Therefore, the control of Huya is not in the hands of the management, but in the place of huanju group, a major shareholder. Therefore, the attitude of huanju group is very important, but judging from the actual situation, huanju group was ready for it two years ago.

On March 6, 2018, douyu announced the completion of a new round of US $630 million in financing, which was exclusively completed by Tencent; only a day later, tiger tooth also announced the completion of a US $461.6 million round of financing, with Tencent as the investor.

It is natural for Tencent to invest in Betta, because Tencent has participated in three of the six previous rounds of financing. Tencent's investment in Huya is a bit surprising to the outside world, because this is the first time Tencent has invested in Huya. Moreover, the time node of this investment is the eve of the listing of Huya.

In May 2018, only two months after accepting Tencent's investment, tiger tooth was listed on the New York Stock Exchange, becoming the "first share of China's game live broadcast". According to the Huya prospectus, Tencent held 34.6% of the shares at that time. However, douyu was listed on NASDAQ in July 2019, with Tencent holding more than 43% at that time, which was the largest shareholder.

The reason why Tencent promotes the merger of douyu and Huya has been brewing for a long time, because when investing in Huya, Tencent has also obtained a right, that is, between the second year and the third year after the completion of the investment, Tencent can gradually purchase the remaining shares of Huya direct broadcasting through the market open price, up to 50.1% of the controlling right.

In the past, Tencent's foreign investment label was "not holding", but as a financial investor to lay out some key business areas. However, in tiger tooth, Tencent has shown the willingness to "hold", at least actively obtained the right to hold shares in the future, which is very rare in Tencent's previous investment cases.

According to the proposal issued by Tencent to Betta, Tencent currently owns about 36.9% of the shares in Huya, accounting for 50.9% of the total voting rights. At the same time, Tencent also holds 38% of the shares in douyu. According to the documents submitted by douyu before, Tencent also has 38% voting rights in douyu.

In addition, when issuing the merger proposal, Tencent also reached an agreement with huanju group and Dong Rongjie. Tencent will purchase 30 million shares of class B common stock of tiger tooth from the time of happy reunion and 1 million shares of class B common stock of tiger tooth from Dong Rongjie. The transaction will be completed before September 9, when Tencent's shareholding ratio in Huya will reach 51% and the voting right will reach 70.4%.

In the proposal, signed by Liu Zhiping, Tencent's president, said Tencent, as shareholders of tiger teeth and Betta, would support the deal. At the same time, Tencent believes the deal will provide the highest value to shareholders of tiger tooth and Betta.

Easy to merge, difficult to integrate

Since the merger is a foregone conclusion, how to integrate the two platforms after the merger, as well as the impact on the whole live game industry, have also become the focus of attention.

Some industry analysts told reporters that financial integration such as stock exchange is relatively simpler, because the equity distribution of both sides is very clear. What is really difficult is business integration, especially for two teams with such fierce competition in the past.

In terms of management after the merger, there is news that the betta management team will take over the new company. In this regard, people close to the two live broadcast platforms also told reporters that Tencent has long had a say in tiger teeth, and tiger tooth's board of directors is basically senior executives dispatched by Tencent. Therefore, when promoting the merger with douyu, Tencent and douyu are really in negotiation.

"According to the past large-scale merger cases, the management of both sides of the merger is basically" one goes and one stays ". At present, the management team of douyu is relatively stable, so the probability of taking over the new company is indeed greater," said the person familiar with the matter. One thing is also supporting this situation, that is, Dong Rongjie sold 1 million Huya shares to Tencent, "if he wants to take over the management New company, this time should not choose to reduce their own equity. "

In addition, in terms of business integration, a Tencent insider told the 21st century economic report that after the merger, the douyu, Huya and Penguin E-sports will certainly have synergy in terms of content and other resources, but it will not be a simple and crude way to completely share the contents of the three companies.

Comparing the financial reports of douyu and Huya in the second quarter, it can be found that the two are getting closer in terms of revenue and user data. The revenue of Betta is 2.508 billion yuan, that of Huya is 2.697 billion yuan, that of Betta is 165 million yuan and that of Huya is 168 million yuan. According to the big data of Aurora, as of July this year, the average daily living users of Betta and Huya have exceeded 10 million, but the monthly average daily life and penetration rate are both declining, and the coincidence rate of the two is as high as 31.6%.

For Tencent, the stock of Internet has become the trend of optimization. For the whole game industry, live game has become an important way for the game to reach users. If Betta and tiger teeth continue to maintain the competitive situation, the result may be to continuously improve the user coincidence rate of the two in the stock market, which is not conducive to the development of the whole industry.

Therefore, the merger of Betta tiger teeth, Tencent in the current environment, made an optimal option. In the game, Dong rongya is attracting more and more players in the game. At the same time, Huya and Tencent are also cooperating in various aspects of E-sports events.

In addition, when it comes to the live game market, fasthand and station B are two players that can not be ignored. However, the relationship between these two platforms and Tencent is now "enemy and friend". On the one hand, Tencent holds about 20% equity of express and 13% equity of station B respectively. Their rapid development will bring great financial returns to Tencent. On the other hand, these two platforms also bring challenges to Tencent's businesses.

Last year, Kuaishou disclosed that the number of daily active users of its live game live mobile terminal exceeded 35 million, which was much higher than that of douyu and Huya. However, the advantage of fighting fish and tiger teeth is that their game user portraits are more accurate, which should also be the most valued by Tencent. Therefore, the merger is only the beginning. After the merger, whether the douyu and Huya can be integrated into a game live super warship is the real challenge for Tencent.

?