Douyu jumped 4% in premarket trading. Tencent Holdings Ltd(0700.HK)plans to take DouYu private amid disagreements over strategy among executives at the Chinese videogame streaming firm, two people with direct knowledge of the matter said.
It is aiming to complete the deal this year, said one of the people.
DouYu, one of Tencent’s main platforms for game marketing and China’s No. 2 videogame streaming site, has been debating its business strategy after Tencent’s plans to merge it with bigger rival Huya Inc were blocked by regulators in July last year on antitrust grounds.
There have been differences among DouYu executives over whether to stick with game livestreaming as its core business or shift towards more profitable entertainment livestreaming, said the other person.
That tension has not abated even after DouYu co-founder and co-CEO Zhang Wenming resigned last month, the person added. DouYu has said Zhang’s departure was due to personal reasons. Co-founder Chen Shaojie now runs the company.
The take-private plans reflect Tencent’s desire to have a firm grip on its core gaming affiliates at a time when it faces a raft of regulatory issues, said the people, who were not authorized to speak on the matter and declined to be identified.
A 60% slide in DouYu’s stock price since July, giving it a market value of $717 million, has also meant it is attractively priced for a take-private deal, they added.
Tencent and DouYu declined to comment.