Tencent Holdings Ltd. will invest $126 million in Glu Mobile Inc. to tap the U.S. company’s success producing smartphone games featuring Kim Kardashian and Katy Perry.
Tencent will buy 21 million shares at $6 apiece to own about 14.6 percent of San Francisco-based Glu Mobile, the companies said in a joint statement. Glu closed at $5.40 in Nasdaq trading Wednesday.
Tencent, Asia’s second-largest Internet company, earns more than half of its revenue from games and has been hunting for new products to boost growth. The new partnership adds a portfolio of shooter, action and narrative role-playing games. Glu’s Kim Kardashian: Hollywood has ranked as high as second among most-downloaded free games on Apple Inc.’s App Store.
“Tencent was attracted to Glu due to its five-year growth track record,” Steven Ma, senior vice president of Tencent, said in the statement. “Collaboration between our companies will enable Glu to tailor its games more powerfully by tapping Tencent’s strength.”
Shenzhen, China-based Tencent already owns stakes in Activision Blizzard Inc. and Riot Games Inc.
The Kim Kardashian game collected $29.3 million in sales for Glu in the fourth quarter, equal to 38 percent of total revenue.
While the game is free to play, the goal is to get users hooked on in-app purchases such as clothing or a burst of energy needed for traipsing through Hollywood.
Glu also said it would partner with Britney Spears on the development on a new mobile game. The exclusive agreement would last five years, with the possibility of a three-year extension.
The company also signed a five-year deal with pop singer Perry, who performed at this year’s Super Bowl. The first game will come in late fall.
In February, Hong Kong-based Animoca Brands Corp Ltd. announced a partnership with heiress Paris Hilton.