Image: Visual China

BEIJING, January 27 (TMTPOST) — Chinese tech giant Tencent is planning to privatize game streaming firm DouYu (Nasdaq: DOYU), Reuters quoted two sources with direct knowledge on the matter.

The decision comes at a time when DouYu’s senior management team is split on the company’s development strategy.

Tencent is the biggest shareholder of DouYu, holding a 37% majority stake. Tencent is hoping to work with at least one private equity firm to complete the deal, the two sources said. Tencent is talking to investment banks on the matter.

Tencent wants to complete the deal in 2022, one of the sources said.

DouYu is one of the main game marketing platforms for Tencent. It is the second-largest game streaming site in China. DouYu has been reconsidering its future business strategy after it failed to merge with Huya (NYSE:HUYA), another major game streaming platform in China.

DouYu’s senior management team has differing opinions on the future development of the company’s business, according to sources. Some believe that DouYu should stick to its game streaming business while others believe that the company should transition to a comprehensive livestreaming platform.

The tension in the senior management has not improved even after DouYu’s founder and co-CEO Zhang Wenming resigned from the company in December 2021, sources said. According to DouYu, Zhang decided to resign from the company for personal matters. DouYu’s now operated by its co-founder Chen Shaojie.

Tencent wishes to strengthen its control over the game streaming firm, which is reflected by the decision to privatize the company, according to sources.

DouYu’s share price has slumped by 60% since July last year. Its market valuation is around US$717 million, which means it is now relatively cheaper for the company to undergo privatization. The company’s share price soared by over 10% pre-trading after the news report was released.

Tencent and DouYu have both declined to comment on the news report.