Report says Tencent in talks to bid for game developer Supercell

Tencent's financial report showed that its online games revenue in the quarter grew by 28 percent year-on-year to 17.1 billion yuan, with contributions mainly from new smartphone games such as Cross Fire Mobile, Honor of Kings, The Legend of MIR 2 and Naruto Mobile.

China's internet giant Tencent Holdings Ltd is said to be in talks to buy control of one of the top-earning game developers in the world from SoftBank Group Corp, in a deal worth $5 billion.

The Wall Street Journal reported that Tencent is in discussions to buy a majority stake in Finnish game maker Supercell. The discussions are at an early stage and it isn't clear if SoftBank, which owns 73 percent of Supercell, is talking to other potential bidders, said the newspaper citing unidentified sources.

Supercell, founded in 2010, is valued at $5.25 billion. According to Chinese media reports, citing people who are familiar with the matter, Tencent has already applied for a $4 billion loan from banks to prepare for the possible deal.

The Shenzhen-based Tencent declined to comment on whether it is in talks to buy the stake, when contacted by China Daily. SoftBank also declined to comment.

It is not the first time that Chinese companies have circled around Supercell. In 2015, market speculation was that Giant Interactive Group Inc teamed up with Alibaba Group Holding Ltd in pursuing a major stake in the group.

Supercell, developer of the hit title Clash of Clans, has topped the list of App Annie's Top 52 publishers for 2014 and 2015.

The Helsinki-based game developer said in March that posted a profit of $930 million on revenues of $2.3 billion in 2015. It also claimed active daily users totaling 100 million around the world.

Industry observers said that getting control would not only help Tencent by getting access to Supercell's high profits, but also reinforce the company's strength in China's mobile game sector.

Xue Yongfeng, an analyst at internet consultancy Analysys International, said that with Supercell's popular games and Tencent's strong distribution channel, an alliance would bring a win-win scenario for both firms.

Games is one of Tencent's biggest business areas. About half the 32 billion yuan ($4.88 billion) revenue Tencent generated in the first quarter came from online games.

Tencent's financial report showed that its online games revenue in the quarter grew by 28 percent year-on-year to 17.1 billion yuan, with contributions mainly from new smartphone games such as Cross Fire Mobile, Honor of Kings, The Legend of MIR 2 and Naruto Mobile.

Pony Ma Huateng, chairman and CEO of Tencent, said in a statement that the company's smartphone games achieved healthy user and revenue growth, thanks to the company's expanding portfolio of popular titles, operational expertise, and extensive user reach.