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Tencent to buy $8.6bn Supercell stake from staff and SoftBank

HONG KONG/TOKYO -- Chinese mobile application provider Tencent Holdings announced on Tuesday that it would acquire up to 84.3% of Finnish mobile game developer Supercell for $8.6 billion.

Tencent agreed to purchase 72.2 % from the current majority shareholder SoftBank Group, a telecommunications and internet company based in Japan, for $7.3 billion. The Shenzhen-based company will acquire the remainder of the stake from current and former employees of Supercell. The payment will be made in three installments over a three-year period.

According to Tencent, potential co-investors, whose names are not disclosed, could join it to form a consortium for the acquisition. However, the Chinese company expects to maintain 50% voting rights. Also, Tencent has agreed to keep the current management team and allow the company operational independence.

SoftBank in 2013 acquired 51% of Supercell's shares for 151.5 billion yen ($1.45 billion) and has since boosted its holdings to some 72.2%. The leading Finnish gaming company has grown quickly on the popularity of games like "Clash of Clans."

SoftBank said it had been purchasing Supercell shares purely for investment purposes and that it decided to cash them in by taking what it saw as a favorable deal. Its return on the investment, including dividends, will total $8.4 billion. According to the company, the internal rate of return was 93% on this investment.

Masayoshi Son, president and CEO of SoftBank, said in a statement that the "decision to divest our shares is driven by our continued focus on monetization for the benefit of our shareholders and on capital structure discipline."

SoftBank also plans to sell most of its remaining stake in Japanese mobile gaming company GungHo Online Entertainment. GungHo said June 3 it would buy back a stake worth 73 billion yen. The Supercell sell-off would mark the end of SoftBank's investment in the mobile game maker.

For Tencent, the Finnish acquisition will help it to solidify its smartphone gaming business.

President Martin Lau said that the company is "dedicated to building long-term strategic partnerships with leading game companies. We are excited that Supercell is joining our global network of game partners."

He emphasized that preserving Supercell's independence is key to further enhancing its innovations in offering more exciting gaming experiences. Lau pledged that it is "important to us that Supercell stays true to its roots by sustaining its unique culture, continuing to be headquartered in Finland, and representing its home proudly."

Ilkka Paananen, CEO of Supercell, echoed that sentiment by saying that Tencent's investment would enable the company to secure "our independence and unique culture of [a] small and independent team," that led to the creation of four games that are now played by over 100 million people every day.

Paananen added that "this new partnership offers us exciting growth opportunities in China, where we will be able to reach hundreds of millions of new gamers via Tencent's channels."

On Tuesday before the announcement was made, Hong Kong-listed Tencent closed up 1.2 % at 172.9 Hong Kong dollars ($22.3), while SoftBank ended 1.4% higher at 5,842 yen in Tokyo.

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