Hong Kong Gaming Firm Leyou Tech Gets a New Buyout Offer

(Bloomberg) -- Leyou Technologies Holdings Ltd. has received a new non-binding takeover offer from a Shenzhen-listed rival gaming firm after months of buyout talks with a different suitor.

Zhejiang Century Huatong Group Co. and Leyou's controlling shareholder Charles Yuk signed a memorandum of understanding regarding the possible sale of shares, Leyou said in a stock exchange filing late Monday, confirming an earlier Bloomberg News report. The parties aim to enter into a formal deal within 90 days of the MOU should they agree to proceed, according to the statement.

Shares in Leyou jumped as much as 6.1% in Hong Kong after trading resumed on Tuesday. The Shenzhen exchange, where Century Huatong trades, is closed until Wednesday for the Labor Day holiday in China.

A bid by Century Huatong would set up a clash with iDreamSky Technology Holdings Ltd., which has been in talks with Leyou's Yuk and other selling holders since late last year. iDreamSky, which counts Tencent Holdings Ltd. among its investors, was in discussions with CVC Capital Partners for a joint offer but the Covid-19 pandemic has brought their talks to a stalemate, Bloomberg News reported last month.

Leyou is still in conversation with iDreamSky and other suitors have expressed interest in recent weeks, according to people familiar with the matter. Century Huatong will likely kick off due diligence soon, said the people, who asked not to be identified as the information is private.

CVC and iDreamSky had proposed to jointly acquire Leyou for $1.23 billion, which was revised from an initial $1.4 billion offer, Bloomberg News reported previously. Century Huatong's offer was slightly higher than its rival bidders, the people said this week.

No final decision has been made and Leyou could still decide against a transaction, the people said. Century Huatong didn't immediately respond to requests for comment during holidays in China. A spokeswoman for iDreamSky declined to comment on Monday, adding the company will provide the latest progress in a timely manner on the stock exchange website.

Century Huatong, founded in 2005, specializes in internet games and auto parts, according to its website. The company's game titles include The Legend of Mir 2, The World of Legend, Crazy Arcade and Final Fantasy 14. It has over 1.8 billion registered users. Last year, the firm completed an acquisition of the online game business of Shanda Games Ltd. in a 29.8 billion yuan ($4.2 billion) deal. Century Huatong's market value was about 87 billion yuan as of April 30.