DoNews, 6/02/15

Beijing-based video game developer and operator Kunlun Tech (300418.SZ) is rumored to be preparing to acquire Finnish mobile game developer Supercell, reportedly prompting SoftBank Global Ventures, the private equity arm of Japanese telecom and media corporation SoftBank Corp., to increase its investment in Supercell.

Kunlun Tech's financial reports show it achieved 2014 net profits of approximately RMB 330 mln, while Supercell, according to publicly issued statements from March this year, achieved annual revenues of USD 1.7 bln (RMB 10.5 bln) in 2014, for a net profit of USD 565 mln (RMB 3.5 bln) - approximately 11 times that of Kunlun Tech. Supercell's revenues came from three mobile games, namely tower-defense strategy game Clash of Clans (COC), virtual farm operation game Hay Day and strategy game Boom Beach. The latter was released in 2014 and the Android version in China is operated by Kunlun Tech.

Editor's Note: SoftBank has bought an additional 22.7% of Supercell shares from existing external investors, bringing its total stake in the mobile game developer to 73.2%. The deal reportedly values Supercell at roughly USD 5.5 bln. In October 2013, SoftBank bought a 51% stake in Supercell for USD 1.5 bln, at a valuation of USD 3 bln. Most of the roughly 27% share that SoftBank doesn’t own is held by Supercell’s management and employees. For more information on this topic, please see "Kunlun Wanwei Licenses Supercell's 'Boom Beach'," MD 7/04/14 issue.

Keywords: profit wireless SoftBank Kunlun Wanwei Supercell Finland revenue M&A mobile gaming overseas 300418.SZ