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UPDATE: DouYu Shares Will Be Cancelled In Exchange For The Right To Receive 7.30 Validly Issued, Fully Paid, Non-Assessable Class A Ordinary Shares Of Huya

GUANGZHOU and WUHAN, China, Oct. 12, 2020 /PRNewswire/ -- HUYA Inc. ("Huya") (NYSE:HUYA) and DouYu International Holdings Limited ("DouYu") (NASDAQ:DOYU) today announced that they

· 10/12/2020 07:36

GUANGZHOU and WUHAN, China, Oct. 12, 2020 /PRNewswire/ -- HUYA Inc. ("Huya") (NYSE:HUYA) and DouYu International Holdings Limited ("DouYu") (NASDAQ:DOYU) today announced that they have entered into an Agreement and Plan of Merger, dated October 12, 2020 (the "Merger Agreement") with Tiger Company Ltd., a newly formed company with limited liability incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of Huya ("Merger Sub"), and, solely for the limited purposes set forth therein, Nectarine Investment Limited ("Tencent"), a wholly owned subsidiary of Tencent Holdings Limited. Pursuant to the Merger Agreement, Huya will acquire all the outstanding shares of DouYu, including ordinary shares represented by American depositary shares, through a stock-for-stock merger (the "Merger").

Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each ordinary share of DouYu (the "DouYu Shares") issued and outstanding immediately prior to the Effective Time (other than the DouYu Shares represented by American depositary shares, each representing 1/10 of a DouYu Share (the "DouYu ADSs"), the Excluded Shares and any Purported Dissenters Shares, each as defined in the Merger Agreement) will be cancelled in exchange for the right to receive 7.30 validly issued, fully paid, non-assessable Class A ordinary shares of Huya (the "Huya Class A Shares"), and each DouYu ADS issued and outstanding immediately prior to the Effective Time will be cancelled in exchange for the right, at the direction of DouYu's depositary bank, to receive 0.730 American depositary shares of Huya, each representing one Huya Class A Share. If the Merger is completed, the shareholders of Huya and DouYu immediately prior to the Merger, respectively, will each hold approximately 50% shares of the combined company on a fully diluted basis.

Concurrently with the execution of the Merger Agreement, DouYu and Tencent entered into a Reassignment Agreement, dated October 12, 2020, pursuant to which Tencent will assign its interests in the game live streaming business operated by the Tencent group under the "Penguin e-Sports" brand (the "Penguin Business") to DouYu (the "Reassignment") and deepen its business cooperation with DouYu in order to integrate the Penguin Business with the business of the combined Huya and DouYu upon the Merger, for a total consideration of US$500,000,000. The closing of the Reassignment is conditioned on, and is expected to occur substantially concurrently with, the closing of the Merger. The closing of the Merger is also conditioned on, and is expected to occur substantially concurrently with, the closing of the Reassignment.

The special committee of Huya (the "Huya Special Committee") and the special committee of DouYu (the "DouYu Special Committee"), each consisting of only independent and disinterested directors, led the negotiation of the Merger Agreement on behalf of their respective companies. The board of directors of each of Huya and DouYu, acting upon the unanimous recommendation of the respective special committee, unanimously approved the Merger Agreement and the Merger. The board of directors of DouYu also unanimously resolved to recommend that DouYu's shareholders vote to approve the Merger Agreement and the Merger. JOYY Inc., Huya's significant shareholder, has also provided its written consent to the execution, delivery and performance of the Merger Agreement by Huya and the Merger Sub and the consummation of the transactions contemplated under the Merger Agreement pursuant to Huya's currently effective memorandum and articles of association.

The Merger, which is currently expected to close during the first half of 2021, is subject to customary closing conditions including the approval of the Merger Agreement and the Merger by an affirmative vote of holders of the DouYu Shares representing at least two-thirds of the voting power of the DouYu Shares present and voting in person or by proxy as a single class at a meeting of DouYu's shareholders which will be convened to consider the approval of the Merger Agreement and the Merger. Tencent and Messrs. Shaojie Chen and Wenming Zhang, the Chief Executive Officer and co-Chief Executive Officer of DouYu, have agreed to vote all of the DouYu Shares and DouYu ADSs they beneficially own, which collectively represent approximately 54.6 % of the voting rights attached to the total outstanding DouYu Shares as of the date of the Merger Agreement, in favor of the authorization and approval of the Merger Agreement and the Merger. There can be no assurance that the Merger will be completed during the first half of 2021 or at all. If completed, the Merger will result in DouYu becoming a privately-held and wholly owned subsidiary of Huya and DouYu ADSs will no longer be listed on The NASDAQ Global Select Market.

If the Merger is completed, Mr. Rongjie Dong, the current Chief Executive Officer of Huya, and Mr. Shaojie Chen, the current Chief Executive Officer of DouYu, will be Co-Chief Executive Officers of the combined company, and Mr. Shaojie Chen, together with the members of Huya's board of directors immediately prior to the Merger, including Mr. Rongjie Dong, will be the members of the board of directors of the combined company.

Huya also announced today that, in accordance with the terms of the Merger Agreement, its board of directors approved a cash dividend in an aggregate amount of US$200,000,000 to be paid on or around the date of the closing of the Merger and in no event later than 20 days after the closing of the Merger to the holders of ordinary shares of Huya whose names appear on Huya's register of members as of the close of business on certain record date after the date when the required DouYu shareholder approval is obtained and prior to the closing of the Merger. Such record date and payment date will be designated by Huya's authorized officer and will be announced in due course.

DouYu also announced today that, in accordance with the terms of the Merger Agreement, its board of directors approved a cash dividend in an aggregate amount of US$60,000,000 to be paid on or around the date of the closing of the Merger and in no event later than 20 days after the closing of the Merger to the holders of ordinary shares of DouYu whose names appear on DouYu's register of members as of the close of business on certain record date after the date when the required DouYu shareholder approval is obtained and prior to the closing of the Merger. Such record date and payment date will be designated by DouYu's authorized officer and will be announced in due course.

Linen Investment Limited, a wholly-owned subsidiary of Tencent Holdings Limited ("Linen"), has entered into a share transfer agreement with affiliates of Mr. Rongjie Dong, pursuant to which Linen will, immediately before the closing of the Merger, purchase from such affiliates of Mr. Rongjie Dong 1,970,804 Class B ordinary shares of Huya, subject to the satisfaction of customary closing conditions (the "Additional Acquisition of Huya Shares").

Tencent has also entered into a separate share transfer agreement with Mr. Shaojie Chen, pursuant to which Tencent will, immediately before the closing of the Merger, purchase from affiliates of Mr. Shaojie Chen that hold DouYu Shares, or certain assignees as may be designated by Mr. Shaojie Chen subject to the restrictions set forth in such share transfer agreement, 3,703,704 DouYu Shares subject to the satisfaction of customary closing conditions (the "Additional Acquisition of DouYu Shares").

It is expected that, immediately after the closing of the Additional Acquisition of Huya Shares, the Additional Acquisition of DouYu Shares and the closing of the Merger, Tencent Holdings Limited's voting power in the combined company held through its affiliates will be 67.5% on a fully-diluted basis.

Citigroup Global Markets Inc. is serving as independent financial advisor to the Huya Special Committee. Skadden, Arps, Slate, Meagher & Flom LLP is serving as U.S. legal advisor to the Huya Special Committee. Haiwen & Partners is serving as PRC legal advisor to the Huya Special Committee. Maples and Calder (Hong Kong) LLP is serving as Cayman Islands legal advisor to the Huya Special Committee.

Morgan Stanley Asia Limited is serving as independent financial advisor to the DouYu Special Committee. Davis Polk & Wardwell LLP is serving as U.S. legal advisor to the DouYu Special Committee. Hankun Law is serving as PRC legal advisor to the DouYu Special Committee. Ogier is serving as Cayman Islands legal advisor to the DouYu Special Committee.

Goldman Sachs (Asia) L.L.C. is serving as financial advisor to Tencent. Latham & Watkins LLP is serving as U.S. legal advisor to Tencent. Zhong Lun Law Firm is serving as PRC legal advisor to Tencent. Walkers is serving as Cayman Islands legal advisor to Tencent.