The rumors of Tencent’s acquisition of Softbank’s stake in Supercell had been spreading for some time now, and we had already written a preview of this last week. Today, the news was finally made official, and Supercell CEO Ilkka Paananen explained the rationale to partner up with Tencent in his own words.
As we mentioned in last week’s article, Tencent has a relatively hands-off approach when it comes to ownership, and this is likely the biggest reason why Ilkka prefers to work with Tencent. Under the deal structure, Supercell will continue to be operationally independent (just like it did under Softbank), with its headquarters remaining in Helsinki and taxes paid in Finland.
The partnership will also allow Softbank to leverage off Tencent’s existing resources, including their massive portfolio of products in China (payment/platforms/media/etc.), global products such as WeChat, and gaming expertise and relationships in both PC and mobile gaming. The last point is especially worth noting, as Tencent owns 100% of Riot, and Ilkka himself noted that now they will “have an excuse to call Riot and talk shop more often”! Could this be a preview of Supercell’s aspirations for making Clash Royale and/or future titles into mobile eSports hits?
Finally, the acquisition will also serve as a morale booster for Supercell’s employees (as if they need any!), as they will be able to sell their shares in Supercell over time. With only 190 employees and at a $10.2 billion valuation(!!!), it’s probably a safe guess that almost every employee at Supercell is now a millionaire! The employees will not be the only ones that benefit from this transaction: Supercell has a charitable foundation which also happens to own company shares. With the sale to Tencent, the foundation will be able to cash out 100% of its shares, which equates to roughly about 200 million Euros! (original source in Finnish here) Too often we get too caught up with the numbers in the business transactions, but it’s great to see that this deal will directly inject funding to help low-income families and environmental causes.
Congratulations to Ilkka and the great team at Supercell, and we will look forward to seeing what’s in store with this new partnership!