Monday, the boards of directors of Chinese live-streaming platforms DouYu and Huya received preliminary non-binding proposal letters from Tencent Holdings proposing that the two companies enter into a stock-for-stock merger. Tencent is looking to convert all DouYu shares into Huya Class A ordinary shares, making Huya the surviving entity of the merger. Since Tencent is proposing an all-stock merger, the transaction would not be subject to any financing contingency.
The proposal, which was signed by Tencent President Martin Lau, expresses the company’s intention to execute the proposed merger as soon as possible. The company hired Goldman Sach (Asia) as its financial advisor for the potential business combination. Tencent also asked Huya’s and DooYu’s boards of directors for full cooperation and the initiation of a complete customary commercial, legal, financial, and accounting due diligence in a timely manner.
The exchange ratio at which DouYu shares would be converted to Huya shares as part of the business combination would be mutually agreed upon among Tencent and the independent members of Huya’s and DouYu’s boards of directors.
Tencent currently holds approximately 38% of the total issued and outstanding share capital and voting power of DouYu and is its largest shareholder. Tencent also owns roughly 36.9% of the total issued and outstanding share capital of Huya, representing a 50.9% majority of Huya’s total voting power. Furthermore, Tencent entered into share transfer agreements with Huya’s previous parent company JOYY and Huya’s CEO Rongjie Dong, to purchase 30M and 1M Huya Class B ordinary shares from them, respectively.
If both parties are satisfied with the closing conditions of the share transfers, these agreements will be consummated on or before Sept. 9. Following the transfers, Tencent’s shareholding in Huya will be increased to 51%, while it’s voting power would be 70.4% of Huya’s total voting power.
Source: Read Full Article