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April 29 (Reuters) - Tencent Holdings Ltd, the dominant social networking and online entertainment company in China, has agreed to buy 14.6 percent of mobile game developer Glu Mobile Inc for $126 million.
Shares of Glu Mobile, which developed Deer Hunter and Kim Kardashian: Hollywood games, rose about 24 percent in extended trading on Wednesday.
Tencent has been aggressive in taking on giants such as Alibaba Group Holding Ltd and Xiaomi Inc in the smart hardware industry.
Tencent launched on Tuesday an operating system for internet-connected devices such as TVs and watches that is open to all developers.
The Chinese company will pay $6 per share for its stake in Glu Mobile, which represents a premium of about 11 percent to the stock’s closing price on Wednesday.
Tencent will buy the shares in two tranches: 12.5 million shares on Wednesday followed by a further 8.5 million some time in the second quarter.
Cowen and Co LLC provided a fairness opinion to Glu Mobile’s board in connection with the deal.
Glu Mobile’s shares were trading at $6.69 after the bell. (Reporting by Devika Krishna Kumar and Anya George Tharakan in Bengaluru; Editing by Robin Paxton)