Categories: Gaming

Leyou Technologies now has an agreement with Tencent


Leyou Technologies is currently in talks with Tencent over sales of its business. Both companies entered an exclusive contract for future acquisition.

Leyou Technologies is the parent company for Warframe developer Digital Extremes. It is also the parent company for Gears Tactics dev Splash Damage. Last Friday, the company also ceased trading in the Hongkong Limited Stock Exchange.

Rumors of various buyers for Leyou floated before Tencent

On July 10, Leyou performed an abrupt stop of their trading. Early notice for trading halt came into circulation at around 9 PM EST for the company.

According to official documents, this was  “pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information of the Company.” The notice did not mention specifics at the time, but the rumor mill was grinding.

Ever since last year, it’s common knowledge within the industry that Leyou is selling. Some of the many interested parties for the acquisition include iDreamsky and Sony.

iDreamsky Technology Ltd is a Shenzhen, China-based gaming company. They operate as a mobile games dev for games like Gardenscapes and Monument Valley.

Initially, rumors persisted that Sony was the likely buyer. Sony Corp. itself, not the PlayStation division, is working towards the acquisition. Eventually, Tencent became a late addition to the roster of buyers.

Late last week, Tencent pushed for an exclusive agreement with Leyou. The exclusivity agreement has several outs in it that can result in a non-purchase.

Tencent exclusivity agreement has its caveats

So far, the Privatization Exclusivity Agreement between Leyou Technologies and Tencent is in effect. This agreement does not guarantee that Tencent will buy the studio, but the chance is likely.

Even then, Leyou has a few caveats listed for the agreement. First, the agreement will only last three months from the date of exclusivity. During this time, Leyou cannot receive any offers or engage in any deals.

The entire document lists protections that prevent Leyou from selling or hampering the deal. Even then, this also means there is a good chance Tencent will get the company without the right price.

Three months is also a short period for any acquisition. This move can either force Tencent to overpay for the company’s assets or give up.

“There is no assurance that any negotiations mentioned in this announcement will either materialize or eventually be consummated and the negotiations may or may not lead to a possible acquisition and privatization of the Company,” says the document.

Leyou Technologies restarted their public trading around the same day. Tencent recently opened a studio in California called Lightspeed LA.

Images courtesy of StreetVJ/Shutterstock, Digital Extremes/Youtube Screenshot

Jerome Castro

Digital marketer and nerd culture writer with an inordinate love for gaming and cooking. Reads medical journals regularly. Loves to read esotericisms and Lovecraft.

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