(Bloomberg) – Sony Corp. is weighing a bid for Leyou Technologies Holdings Ltd., people familiar with the matter said, paving the way for an intensified bidding war for the Hong Kong-listed gaming company.
The Japanese tech giant is working with a financial adviser on the potential offer for Leyou, the people said, asking not to be identified because the matter is private. In May, the Chinese gaming firm confirmed that it had received a non-binding takeover bid from its Shenzhen-listed rival Zhejiang Century Huatong Group Co. after months of buying talks with other bidders, including iDreamSky Technology Holdings Ltd.
Leyou’s shares extended its earnings by as much as 9.8% after the Bloomberg News report. The stock has increased approximately 20% this year, giving the company a market value of approximately $ 1.1 billion.
Leyou’s controlling shareholder, Charles Yuk, had been in talks with iDreamSky for a majority stake sale since late last year. iDreamSky, which has Tencent Holdings Ltd. among its investors, had been in talks with CVC Capital Partners for a joint bid that valued Leyou at around $ 1.23 billion, but the Covid-19 pandemic brought their talks to a deadlock, reported Bloomberg News in April.
Sony hopes it can outperform other bidders with greater funding certainty, the people said. Leyuk’s Yuk aims to choose a buyer and sign an agreement as early as this month, the people said.
The talks are still ongoing and a final decision has not been made, the people said. Other bidders could still emerge, they said. Representatives for Leyou and Sony declined to comment.
Leyou was listed in Hong Kong in 2011 and counts Warframe and Dirty Bomb as free shooting games. It is also working with Amazon.com Inc. to co-produce a video game based on the popular fantasy series “The Lord of the Rings,” according to its website.
Sony has recently been aiming to beef up its content arsenal, as CEO of tech giant Kenichiro Yoshida believes that in turn would strengthen the value of its branded consumer electronics hardware. That includes PlayStation 5, the new video game console the company plans to launch later this year.
Leyou’s Warframe is out now on PlayStation 4, and the company has said in its latest earnings report that it plans to expand the game to more platforms, including next-gen consoles.
(Updates with more background on the seventh paragraph).
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