Tencent in exclusive talks to buy Hong Kong gaming firm Leyou

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A pedestrian walks past Tencent Holdings’s headquarters in Shenzhen, China.

Qilai Shen | Bloomberg | Getty Images

Chinese tech giant Tencent is in exclusive talks to acquire Leyou Technologies, the Hong Kong-listed games developer announced on Friday.

Leyou has a number of subsidiaries which make video games. It is most well-known for “Warframe,” a title created by subsidiary Digital Extremes.

It has also announced plans to bring out a game based around “The Lord of the Rings” franchise and is co-developing the upcoming title with Amazon’s gaming division.

Leyou and its controlling shareholder, Charles Yuk, have entered into an exclusivity agreement with Tencent Mobility Limited, a Tencent subsidiary, Leyou said. Tencent Mobility is looking to buy Leyou and take it private.

News of the talks with Tencent was first reported by Bloomberg.

The exclusivity agreement means that Leyou and Yuk won’t be able to negotiate with another potential buyer in the next three months while the Tencent talks are ongoing. Leyou said the negotiations were still in progress and that there was no certainty the talks would lead to a binding deal.

The firm had earlier halted trading in its shares pending an incoming takeover announcement.

It comes after a Bloomberg report last week said that Sony was considering a bid for Leyou. The Japanese gaming giant recently announced a $250 million investment in Epic Games, the company behind the popular battle-royale video game “Fortnite.”

Sony has been aggressive in bolstering its access to key intellectual property ahead of the launch of its flagship PlayStation 5 console slated to be released later this year. Last month, the firm unveiled the design of its next-generation device and a line-up of well-known games that will be released.

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