Reading Time: 3 minutes

Modern Times Group MTG AB (MTG) announced the entering into a binding term sheet and the forming of a strategic joint venture as part of a transaction that allows HUYA Inc. to acquire a minority stake in MTG’s portfolio company ESL.

• Modern Times Group MTG AB (MTG) announces the signing of a term sheet for a new strategic partnership with leading Chinese game live streaming platform HUYA Inc. (Huya).

• Pursuant to the term sheet, Huya has agreed to form a joint venture with MTG’s portfolio company Turtle Entertainment GmbH (ESL), the largest esports company in the world, to facilitate expansion into China, and to acquire a minority interest in ESL. The investment size is USD 30 million made up of both primary and secondary shares.

• ESL and Huya plan to host and build local Chinese esport competitions connected to the global ESL tournament calendar to ensure maximum Chinese esports athlete participation on a global scale.

• As part of the transaction, ESL will issue new shares at a value of USD 22 million to increase capital to be used for further expansion, parts of which will be used by ESL to fund its pro rata part of the joint venture company.

• The terms of the transaction contemplated under the term sheet are binding. Both the joint venture and the acquisition by Huya of a minority interest in ESL are subject to customary confirmatory due diligence as well as the negotiation and signing of definitive transaction documents.

If completed, the transaction will further strengthen ESL‘s position as the leading and largest esports company globally, and the forming of a joint venture between ESL and Huya will create a natural alliance to facilitate expansion of ESL’s offering in the Chinese market. The Chinese esport market in 2019 is expected to generate revenues of USD 210 million, overtaking Western Europe as the second-largest esport region globally in terms of revenues*.

Huya will acquire USD 30 million worth of primary and secondary shares in ESL at a pre-money enterprise value of ESL of USD 425 million. As part of the transaction, ESL will issue new shares at a value of USD 22 million to increase capital to be used for further expansion, parts of which will be used by ESL to fund its pro rata part of the joint venture company.

“We are pleased to establish a close partnership with ESL, which demonstrates Huya’s further penetration into the global esports sector. Together with ESL, we are thrilled to bring more world class global esports content to Chinese gaming enthusiasts,” says Rongjie Dong, Chief Executive Officer of Huya.

“We are excited to announce this term sheet for an important strategic partnership which provides us with a strong partner in Huya to pave the way for a successful ESL expansion into the thriving Chinese esport and gaming market in due time,” says MTG President and CEO Jørgen Madsen Lindemann.

Huya is a leading game live streaming platform in China with a large and active game live streaming community. The Company cooperates with esports event organizers, as well as major game developers and publishers, and has developed esports live streaming as one of the most popular content genres on its platform. The Company has created an engaged, interactive and immersive community for game enthusiasts of China’s young generation. Building on its success in game live streaming, HUYA has also extended its content to other entertainment content genres. HUYA’s open platform also functions as a marketplace for broadcasters and talent agencies to congregate and closely collaborate with the Company.

Founded in Germany in 2000, MTG’s portfolio company Turtle Entertainment GmbH (ESL) has been developed into the world’s largest esports company. It operates high profile, branded international leagues and tournaments such as ESL One, Intel® Extreme Masters, ESL Pro League and other top tier stadium-size events, as well as ESL National Championships. Through the Joint Venture ESL and Huya will build local Chinese esports competitions connected to the global ESL tournament calendar to ensure maximum Chinese esports athlete participation on a global scale.

The terms of the transaction contemplated under the term sheet are binding. The transaction is subject to customary confirmatory due diligence, as well as further negotiation of, and agreement on, complete transaction documentation and signing is expected to take place during the fourth calendar quarter in 2019. MTG – the majority owner in ESL – will retain majority ownership of ESL also following a completed transaction. The remaining shares in ESL are owned by the founders of ESL.

Related Topics:gambling industry in Europe

George Miller

George Miller (Gyorgy Molnar) started his career in content marketing and has started working as an Editor/Content Manager for our company in 2016. George has acquired many experiences when it comes to interviews and newsworthy content becoming Head of Content in 2017. He is responsible for the news being shared on multiple websites that are part of the European Gaming Media Network.