Tecent Invested $500M in CJ Games, Becoming 3rd Largest Shareholders

20140326153754_1858CJ E&M announced that China’s Tencent invests a total of $500M(533 billion won) in CJ Games on the 26th.  With this investment, Tencent has become 3rd largest shareholders of CJ Games.

CJ Games, a subsidiary company of CJ E&M, is a large scale development holidng company possessing  AniPark, Seed9Games, and Blue Pepper with game lineups such as <Everybody ChaChaCha>, <Dice Venture>, <Taiming Monsters>.

The recent investment was completed with Tencent’s purchase of 28% of CJ Games stocks.  CJ E&M has sold its shares to Tencent, and in consequence has moved down from its previous position as the largest shareholder to the second largest shareholder.  CJ E&M’s advisor JoonHyuk Bang now holds the position as the largest shareholder.

“It was in order to combine the game development and publishing business and to enhance the competitiveness of the gaming industry,” explained CJ E&M on this investment. CJ Games plans to utilize the newly acquired funding to merge with CJ E&M’s gaming branch Netmarble.

There are two main things that CJ E&M has gained from the sale of CJ Games shares.  First, CJ E&M has finally rid itself of the issue regarding the Monopoly Regulation and Fair Trade Act (hereinafter the FTA.) With the limitations set upon by the provision of the share rate control of sub-sub-subsidiary company, the FTA, newly amended in 2013, requires the parent company to either separate or completely acquire shares in its subsidiaries. CJ E&M had been riddled with the rumors of selling CJ Games after a rupture of investment from STIC Investment last year.

However, with CJ E&M stepping down from the largest shareholder position, the previous limitations of the FTA has now been lifted.  In fact, CJ Games was able to acquire Netmarble thanks to Tencent’s investment. With its separation from CJ E&M, it has now improved its competitiveness in the industry by combining the previously separated development and the business capabilities.

The tie between CJ Games and CJ E&M is still tight though, because Bang now sits as CJ Games’s largest shareholder while still being CJ E&M’s second largest shareholder.

Second of the two is that CJ E&M has now begun its official globalization in China with this deal. Tencent has already started the licensing of CJ E&M’s <Dice Venture>, <Everybody PawPawPaw>, and more for China in January.

This new deal appears to be the groundwork for strengthening the relationship of the two companies. Tencent possesses the ‘WeChat’ platform, a mobile messenger app that rivals the scale of Korea’s most influential mobile app KakaoTalk.

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