The plan to merge Chinese top video game streaming platforms Huya and DouYu has been terminated. This was confirmed in an official announcement DouYu International Holdings Ltd made on Monday. The company said that it had terminated its $5.3 billion deal with Huya Inc. shortly after the Chinese market regulator blocked Tencent Holding Ltd’s plans to merge the two videogame streaming sites.
On Saturday, Chinese market regulator – State Administration of Market Regulation (SAMR), announced that it would stop Tencent Holdings Ltd‘s plans of merging Huya and DouYu based on antitrust issues. This is a continuation of crackdowns against tech companies that have affected big tech companies like Didi and Alibaba.
Tencent Holdings Ltd. first mentioned plans to merge the country’s top two video game streaming platforms Huya and DouYu last year and planned to do this to streamline its stakes in the firms which are jointly worth more than $5.3 billion in market value.
With 36.9 percent, Tencent is Huya’s biggest shareholder. The multinational technology company also owns more than one-third of DouYu.
According to the State Administration of Market Regulation (SAMR), Huya and DouYu’s combined market share in the video game live streaming sector would surpass 70%, and merging them into one firm would only consolidate Tencent’s dominance in this market as it already has over 40% market share in the online games operations segment.
After the announcement to block the merger, DouYou immediately responded that it “fully respects the regulatory decision and actively cooperates with regulatory requirements to operate in compliance with applicable laws and regulations”. Tencent on the other hand said that “We will abide by the decision, comply with all regulatory requirements, operate in accordance with applicable laws and regulations, and fulfill our social responsibilities”.
U.S.-listed shares of DouYu were down 2% premarket, while those of Huya (HUYA.N) were down -1%.