* Tencent will become third-largest investor in company
* Tencent will take 28 pct stake in CJ Games for $500 mln
* Deal allows Tencent to expand globally, gives CJ games
foothold in China
(Adds company comment, background)
By Paul Carsten
BEIJING, March 26 China's Tencent Holdings Ltd
said on Wednesday it was buying a 28 percent stake in
South Korean mobile gaming firm CJ Games for $500 million.
The purchase will help Tencent, China's biggest listed
Internet company, expand its profitable online and mobile gaming
business and grow its presence abroad. CJ Games is an online and
mobile games developer and publisher.
The investment marks the latest stage in a frenzy of deals
in China's Internet sector, as Tencent, Alibaba Group Holding
, the world's biggest e-commerce company, and Baidu
Inc, China's biggest search engine, all race to take
control of people's smartphones as mobile Internet use booms in
More than 500 million people, or four in every five Internet
users in China, have gone online with a mobile device as of
December, according to the official China Internet and Network
"Our partnership combines CJ Games' unrivalled game
development skills and mobile game line-up, together with
Tencent's strong game publishing and operation capabilities in
China," said Martin Lau, Tencent's president, in a press release
The deal will also establish a foothold for CJ Games in
China and pave the way for Tencent and CJ Games to make a global
push, the press release said.
Tencent, China's biggest listed Internet firm and a social
media giant, rules China's smartphones with its WeChat app,
known as Weixin in China.
In January it had 225 million active users, according to
Beijing-based consultancy iResearch, covering over
three-quarters of the total number of people analysed.
Now the company is trying to push WeChat overseas. Globally
the app now has 355 million monthly active users, the company
said earlier this month.
Tencent will focus more of its overseas investment on WeChat
in markets where it already has traction, executives said on a
conference call following earnings results released this month.
Tencent spent more than 19.1 billion yuan ($3.08 billion) on
investments last year, up 17.6 percent from 2012.
Alibaba, its closest competitor, has invested more than $3.5
billion since the beginning of 2013, according to Reuters
Tencent will buy a mix of existing and newly issued common
stock, the company said in a statement to the Hong Kong
Exchange, making it the third-largest investor in CJ Games after
Bang JH and CJ E&M Corp.
CJ Games will also acquire and merge Netmarble, a game
distribution division of CJ E&M, the statement said.
Tencent is more than one-third owned by South African
publishers Naspers Ltd.
($1 = 6.2024 Chinese yuan)
(Additional reporting by Joyce Lee in SEOUL; Editing by Miral
Fahmy and Matt Driskill)