DJ EQS-News: Happy Annunciation approaching with Tencent ambiguity on the acquisition of Fire Rock
EQS-News / 28/12/2020 / 10:20 UTC+8
Happy Annunciation approaching with Tencent ambiguity on the acquisition of
Fire Rock?
On the eve of this Christmas holiday, the market rumored that the parent
company of Tik Tok, BtyeDance intended to acquire CMGE Technology Group
Limited (HKSE:302), though both companies had simultaneously denied the
merger rumors on the same day, causing the CMGE stock experienced a roller
coaster ride. On the other hand, there were rumors for long that Fire Rock
(HKSE:1909) had been the target of Tencent (HKSE:700), the giant of gaming
industry. It becomes intriguing when both of them remained ambiguous on this
news without clear denial.
Last Tuesday (22 December 2020), Reuters quoted a market source as saying
that Tik Tok's parent company ByteDance plans to acquire CMGE at a price of
RMB$4 to 5 per share. Calculated with the shareholdings of Fair Ridge, owned
by Chairman of CMGE Mr. Xiao Jian and the Vice Chairman, Mr. Sin Hendrick,
it is believed to be worth approximately US$275 million (approximately
HK$2.145 billion).
CMGE noted in their announcement that while it has maintained a close
cooperation with ByteDance in its ordinary course of business, the market
rumor about acquisition was untrue.
There has to be a reason for the news. Who will be the ultimate real target
of Tencent? What makes Tencent successful, lies on its willingness and
courage to splash out on mergers and acquisitions, including 100%
shareholding of Riot Games (developer of "League of Legends") , 84.3%
shareholding of Supercell (developer of "Brawl Stars"), 40% shareholding of
Epic Games (developer of "Fortnite"), 11.5% shareholding of Bluehole Ginno
Games(developer of "PUBG").
Therefore, rumors lingered in the market that Tencent has been targeting on
acquisition of a few gaming companies, including Fire Rock, a game developer
who begins expanding its game operation business, especially in China and
Southeast Asian markets such as Vietnam and Thailand in this recent years.
Meanwhile, in September this year, Tencent announced the opening of a new
office in Singapore as a business center in Southeast Asia, which seems to
reflect the group's intention to shift its development focus to the
Southeast Asian market as well.
With Tencent shifting its focus on Southeast Asian market, apart from the
first-line games such as "PUBG" and "League of Legends" etc, it will
requires abundant "rudimental" games similar to "Candy Crush" and "Angry
Bird" to attract leisure and casual game players with stable consumption
power, which resonates with the target user group of "Fish Catching
Contest", a game developed and launched by Fire Rock. The game has
maintained stable income since its launch. For the year of 2019, Fire Rock's
revenue from the Asia-Pacific region surged by 1903% year-on-year to RMB$
13.49 million. In the first half of 2020, the revenue of Fire Rock's Asia
Pacific region further increased to RMB 27.28 million, up 114 times
year-on-year. The half-year performance of Fire Rock increased by 102%
compared to that of the entire fiscal year last year.
What should not be neglected is that the founder of Fire Rock, Mr. Zhang Yan
has an affinity with Tencent. Prior to founding Fire Rock, Zhang has also
founded the Domain Computer Network Company Limited ("Domain Computer
Network") in 1997. Tencent has acquired 19.9% shareholdings of Domain
Computer Network in 2005 and eventually a full acquisition in 2010. Since
the acquisition, there have been rumors that Zhang has a very close
relationship with Tencent which the market infers that Tencent may also
acquire Fire Rock in the near future, not to mention, with the promising
business performance of Fire Rock and the all-rounded development of the
Company upon the acquisition.
File: Happy Annunciation approaching with Tencent ambiguity on the
acquisition of Fire Rock [1]
28/12/2020 Dissemination of a Financial Press Release, transmitted by EQS
Group.
The issuer is solely responsible for the content of this announcement.
Media archive at www.todayir.com
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(END) Dow Jones Newswires
December 27, 2020 21:20 ET (02:20 GMT)
© 2020 Dow Jones News
