Chinese live game streaming firms Huya, DouYu to merge

The Huya logo is shown on the NYSE boards ahead of the comapny's iPO at the New York Stock Exchange in New York, U.S., May 11, 2018. /Reuters

Huya Inc will buy DouYu International Holdings Ltd in a stock-for-stock merger deal, the Chinese live game streaming companies said on Monday.

Tencent, Huya's biggest shareholder and also owns over a third of DouYu, had been pushing for the deal for months.

DouYu will receive 0.730 American depositary shares of Huya, representing a premium of 34.5 percent to DouYu's last close of $14, valuing it at nearly $6 billion, according to Reuters calculation based on 317.5 million shares.

The merged entity would have a combined market share of more than 80 percent in the country, according to data from MobTech.

Huya and DouYu said their shareholders will each hold about 50 percent shares of the combined company on a fully diluted basis.

Huya Chief Executive Officer Rongjie Dong and his DouYu counterpart Shaojie Chen will be co-CEOs of the combined company.

Tencent will integrate its game live streaming business under its "Penguin" arm with the combined businesses of Huya and DouYu after the merger for a total consideration of $500 million.

DouYu's U.S.-listed shares, which have risen more than 65 percent this year, were up 23.2 percent before the bell.