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SoftBank Buys ‘Clash of Clans’ Developer Majority Stake

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SoftBank President Masayoshi Son
SoftBank, led by billionaire President Masayoshi Son, is making deals in Europe and North America to tap growth amid a declining population at home. Photographer: Akio Kon/Bloomberg

Oct. 16 (Bloomberg) -- SoftBank Corp. took control of Supercell Oy, the Finnish developer of games including “Clash of Clans” and “Hay Day,” in a bid by the carrier to capitalize on booming demand for titles played on mobile phones.

Japan’s third-largest wireless carrier is buying a 51 percent stake in Supercell with its GungHo Online Entertainment Inc. unit, which is paying 20 percent of the $1.53 billion price, SoftBank said yesterday in a Tokyo Stock Exchange statement. Supercell started in 2010 with six founders and has grown to 130 employees. Its games rack up about 10 million downloads daily, according to Chief Executive Officer Ilkka Paananen.

“Our long-term vision is to build the first truly global games company, one with a strong foothold in the big western markets as well as in each of the big three Asia markets,” Paananen said in an interview.

SoftBank, owned by billionaire Masayoshi Son, is making deals in Europe and North America to tap growth amid a declining population at home. The Tokyo-based company paid $21.6 billion for control of Sprint Corp. and invested $150 million in 2010 to acquire a stake in Zynga Game Network Inc., which also found success with an agriculture-theme game, FarmVille.

SoftBank bought the stake from a group of private equity and venture capital investors led by Accel Partners. Accel bought a minority stake in the gamemaker in May 2011 for $12 million after investing in another Finnish mobile-phone gamemaker, “Angry Birds” developer Rovio Mobile Oy.

‘Completely’ Independent

In April, Supercell closed a $130 million round of financing that valued it at $780 million. The Helsinki-based gamemaker, which was raking in $2.5 million daily from virtual goods sold on its two top games as of May, will operate “completely independently,” said Paananen.

SoftBank plans to complete the transaction by early November, it said in its statement.

SoftBank, founded in 1981, has stakes in more than 1,000 Internet operations including Yahoo Japan Corp. and Ustream Inc., according to its website. It owns more than a third of Alibaba Group Holding Ltd., China’s largest e-commerce company. Its $20 million investment in Alibaba.com could be worth more than 1,000 times that if it proceeds with an initial public offering. Analysts estimate Alibaba may be worth as much as $120 billion.

Farmers, Barbarians

GungHo, which makes the “Puzzle & Dragons” game, is led by Taizo Son, the youngest brother of SoftBank’s President Son.

Supercell’s games are played on devices such as Apple Inc.’s iPads and iPhones, and smartphones and tablets running Google Inc.’s Android software. “Clash of Clans” focuses on combat strategy, with users raising barbarian armies, while “Hay Day” simulates crop-tending.

Son is forecasting record domestic earnings this year for SoftBank as new subscribers are added more quickly and the Sprint deal saves $2 billion annually by pooling purchases of handsets and network equipment.

“SoftBank is trying to use Supercell’s content to increase subscribers for Sprint,” Hideki Yasuda, an analyst at Ace Research Institute in Tokyo said in a phone interview. “The company is buying Supercell’s growth potential in the future. Content can help device sales.”

Rovio, whose headquarters are in nearby Espoo, Finland, made its money by pushing tons of ads to free players and a little more by charging users an extra buck or two to download an ad-free version.

SoftBank rose 0.1 percent to 7,240 yen yesterday in Tokyo trading. The shares have more than doubled this year while Japan’s benchmark Topix index has added 39 percent.

To contact the reporters on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net

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