Beijing-based mobile Internet company KongZhong said today it is buying Shanghai Dacheng Network for $80 million.
Shanghai Dacheng Network is a developer of 3-D massively multiplayer online (MMO) games where thousands of people play together in online virtual worlds. The transaction shows that online gaming, on its way to $3.8 billion in revenues in China, remains a hot market.
The aim is to combine KongZhong’s mobile game business with Dacheng’s 3-D game engine and development skills to create a multi-platform digital entertainment and gaming company, focused on both PC MMOs and mobile games.
The deal is expected to close in the first quarter, and payment will be spread out over time, with the total paid contingent on performance. The financing includes a mix of cash and stock. Dacheng’s newest game is Loong, which just enjoyed a strong launch. KongZhong’s chairman and chief executive, Leilei Wang, holds a 24.8 percent stake in Dacheng but has never held a management position at the company. Still, KongZhong said Wang recused himself from the acquisition deal and the transaction was approved by KongZhong’s audit committee. Wang will not receive any cash under the deal and will receive only shares.