China’s regulators review Huya’s USD6b deal to buy DouYu

China’s regulators said they are reviewing Huya Inc.’s proposal to acquire game-streaming rival DouYu International Holdings Ltd., part of a crackdown on anti-competitive behavior in the country’s technology industry that throws the USD6 billion transaction into question.
Guangzhou-based Huya offered to buy its domestic competitor in October, proposing an all-stock transaction that would have created a combined business valued at about $11 billion at the time. Internet giant Tencent Holdings Ltd., a shareholder in both companies, would have had about 68% of the merged business’s voting shares.
Regulators announced their review of the Huya acquisition on Monday as they levied fines against a Tencent affiliate and Alibaba Group Holding Ltd. for their M&A transactions. The two companies were fined 500,000 yuan ($76,500) each over failing to declare past acquisitions under the country’s anti-monopoly laws. The antitrust agency singled out the Huya deal during a lengthy Q&A posted on its website explaining why it was tightening oversight of internet-sector deals in general.
A Huya spokesperson said the company has applied to the antitrust watchdog for a review of the proposed merger and will cooperate with the regulator. DouYu representatives didn’t immediately respond to requests for comment. Their combined market valuations are now about $8.5 billion. DouYu’s U.S.-traded shares fell 2.4% at 2:03 p.m. in New York while Huya slid less than 1%.
The transaction was negotiated before the recent government crackdown and was aimed at creating the country’s dominant live-streamed gaming leader akin to Amazon.com Inc.’s Twitch. Coco Liu & Zheping Huang, Bloomberg