Tencent Holdings is close to buying the company that makes the world’s highest grossing mobile game by revenue.
The Chinese Internet giant is trying to jump to the top spot in the fast-growing and lucrative mobile-games industry by acquiring Supercell, the Finnish maker of the popular “Clash of Clans” game in a deal that valued at more than $9 billion, people familiar with the matter told the Wall Street Journal.
The Chinese company is in late-stage talks with SoftBank Group to buy the Japanese telecommunications firm’s majority stake in Supercell, the Journal reported. Tencent is also in discussions with several financial investors, including Beijing-based Hillhouse Capital Group, to join in the purchase as co-investors, the sources said.
If the deal goes through, it would be the Chinese firm’s largest to date. An agreement could be disclosed as early as next week, though it still faces hurdles, including efforts to put together a financing package, the people cautioned.
Last year, Supercell earned 693 million euros ($779.1 million) last year, on revenue of 2.11 billion euros. It has offices in Finland, San Francisco, Tokyo, Seoul and Beijing.
In 2013, SoftBank paid $1.53 billion for a 51% stake in the Finnish gaming company. Last year, SoftBank boosted its stake to 73% but didn’t disclose the price of the transaction. In 2015, Supercell was valued at roughly $5.25 billion, according the sources.
Supercell’s rising value reflects the rapid growth of the mobile-game industry. Revenue from smartphone and tablet games reached $30.2 billion in 2015, compared with $33 billion for computer gaming and $6.05 billion for console, according to industry tracker SuperData Research.
SoftBank wants to sell its Supercell stake to shore up its balance sheet. It currently has more than $80 billion in net debt, about one-third of which is tied to its struggling US mobile-carrier unit, Sprint. Last month, it said it would sell at least $7.9 billion of its shares in Chinese e-commerce giant Alibaba Group Holdings to pare its debt.
Tencent, Supercell and SoftBank declined to comment to the Journal story.