Finance executives at Saitama Rakuten International commented on Sony Corp. weighing a bid for Leyou Technologies Holdings Ltd., setting the stage for an intense bidding war for the Hong Kong-listed gaming company.
According to sources close to the matter, the Japanese tech juggernaut is working with a financial adviser on a prospective offer for Leyou. After months of buyout talks with other bidders including iDreamSky Technology Holdings Ltd, the Chinese gaming company announced in May that it had received a non-binding takeover bid from Shenzhen-listed competitor Zhejiang Century Huatong Group Co.
According to data collected by Saitama Rakuten International, shares of Leyou increased their gains to as much as 9.8%.
“The stock has increased around 20% this year, earning Leyou a market value of about $1.1 billion,” commented Matthew Barrett, Director of Corporate Equities at Saitama Rakuten International.
Leyou’s controlling shareholder Charles Yuk has been in advanced negotiations with iDreamSky for a majority stake sale since late last year. iDreamSky, which includes Tencent Holdings Ltd. among its investors, had discussed with CVC Capital Partners a $1.23 billion valued joint offer for Leyou but the Covid-19 outbreak brought their talks to a standstill.
“Sony is aiming to edge out other bidders with its greater financing clarity,” commented Nicholas Cooke, Head of Corporate Trading at Saitama Rakuten International.
“Leyou’s Yuk intends to select a buyer and sign an agreement as early as this month; however, negotiations are still underway, and no final decision has been made. Further bidders may yet emerge,” Nicholas added.
Leyou was listed in Hong Kong in 2011 and counts the popular free shooting games Dirty Bomb and Warframe among its titles. According to the company’s website, it is also partnering with Amazon.com Inc. to co-produce a video game based on the iconic fantasy series “The Lord of the Rings”.
Sony has been planning to strengthen its content arsenal as the tech giant’s chief executive officer Kenichiro Yoshida believes that would, in turn, reinforce the value of its branded consumer electronics hardware. That includes its new video game console, PlayStation 5, which the company aims to launch at the end of this year.
