Reuters said that Tencent plans to team up with at least one private equity firm for the deal and is currently talking to investment banks. Tencent, which is currently the largest shareholder of DouYu with a 37% stake, aims to complete the transaction this year. DouYu is one of Tencent‘s main platforms for game marketing and China’s second-biggest video game streaming site.
The report quoted individuals familiar with the matter saying that there are differences among DouYu executives over whether to stick with game livestreaming as its core business or to shift towards more profitable entertainment livestreaming. The tensions have not abated, even after DouYu co-founder and co-CEO Zhang Wenming resigned last month.
On December 7, 2021, DouYu announced changes to the board of directors and management, and Zhang Wenming voluntarily resigned as director and co-CEO for personal reasons. Co-founder Chen Shaojie now runs the company.
It is worth noting that DouYu once planned to merge with another live gaming platform Huya. Their concentration agreement suggests Tencent plans to acquire all the shares of DouYu through Huya. Upon the transaction, Tencent will gain independent control of the merged entity. On July 12 last year, DouYu announced plans to terminate the merger agreement with Huya via a statement on its official website.
DouYu had a less than satisfactory performance in Q3 last year, as indicated in its quarterly report. Data show that in Q3 2021, the platform’s revenue was 2.348 billion yuan ($369 million), down 7.8% year-on-year, while the net loss was 143.5 million yuan. In Q3 of 2020, DouYu had a net profit of 59.6 million yuan.