BEIJING -- China's leading internet service company, Tencent Holdings is merging its music streaming service with the nation's largest online music streaming company, China Music Corporation.
Tencent-owned QQ Music and CMC will form a new company, in which Tencent will become the majority shareholder. Tencent declined to provide details of the deal, unveiled on Friday. But the company will increase its stake in CMC from 16% to 60% for roughly $2.7 billion, according to the Wall Street Journal.
"The new company will be the flagship for Tencent's digital music and related business," said Martin Lau, president of Tencent. It will "support the healthy development of China's digital music industry built upon authorized music rights," he added.
CMC-owned music streaming service KuGou and Kuwo are dominant in the local market, accounting for roughly 40% of China's mobile phone music app downloads, according to internet consultancy iiMedia Research Group. As QQ Music accounts for about 15% of online users, the merger will make Tencent the nation's largest music streaming provider.
The deal comes as the numbers of mobile phone music listeners in China rises rapidly. According to iiMedia, daily users of music streaming services on mobile phones jumped 18.2% to 54.5 million between January and August 2015.
Hong Kong-listed Tencent's shares rose more than 1% after the announcement to 185.90 Hong Kong dollars ($22.89), before closing at HK$184.80.
The company's core internet business is also seeing robust growth globally. Users of Tencent's free messaging software WeChat doubled in the Asia Pacific region outside China from a year earlier in the first half of 2016, according to digital consumer researcher GlobalWebIndex. Growth has been particularly strong in South Korea, with more than a 300% increase from a year earlier, while it has
grown 284% in Australia. WeChat now covers more than 760 million users globally.
The merger followed Tencent's announcement in June that is was acquiring Japan's SoftBank Group for $8.6 billion, and buying Finnish mobile game developer Supercell from its staff.