DouYu International Holdings (DOYU) - Get DouYu International Holdings Ltd. Sponsored ADR Report was soaring Monday following its agreement to be acquired by fellow Chinese streaming company Huya (HUYA) - Get HUYA, Inc. Sponsored ADR Class A Report in an all-share deal.
American depositary receipts of DouYu were climbing 12.5% to $15.76, while Huya ADRs were down 9.7% to $23.28.
Investors have been offered 0.73 American depositary shares of Huya for each ADS of DouYu, the companies said. Shareholders will each hold about 50% shares of the combined company on a fully diluted basis.
Bloomberg estimated the deal has a market value of more than $11 billion.
Tencent Holdings (TCEHY) , which currently owns stakes in both companies, will hold about 68% of the merged business’s voting shares. Tencent was up 1.4% to $71.90.
Tencent, Huya's biggest shareholder, also owns over a third of DouYu and had been pushing for the deal for months, Reuters reported.
The boards of both companies unanimously approved the deal, which is expected to close in the first half of 2021 if investors holding two-thirds of DouYu’s shares vote in its favor.
The merged entity would have a combined market share of more than 80% in the country, Reuters said, citing data from MobTech.
Tencent will assign its interests in the game live streaming business under its "Penguin e-Sports" brand to the newly merger company for $500 million. This transaction is expected to close concurrently with the merger.
If completed, the merger will result in DouYu becoming a privately-held and wholly owned subsidiary of Huya and DouYu ADSs will no longer be listed on the Nasdaq.
Huya CEO Rongjie Dong and his DouYu counter-part Shaojie Chen, will be co-CEOs of the combined company.
China’s game-streaming market is estimated to generate 23.6 billion yuan ($3.5 billion) in revenue this year, Bloomberg said, citing iResearch.