Tencent to Pay $500 Million for Stake in CJ Games

Tencent Holdings Ltd., Asia’s biggest Internet company, agreed to pay about $500 million for a 28 percent stake in South Korea’s CJ Games to bolster its lineup of online and mobile entertainment. Tencent shares fell.

The deal includes the purchase of new and existing shares in Seoul-based CJ Games, the companies said in statements yesterday. The agreement includes the acquisition of the Netmarble portal of CJ E&M Corp., with titles including “Taming Monsters” and “Everybody Cha Cha Cha.”

Tencent, owner of the WeChat instant messaging application, is making acquisitions to bolster content and location services amid increased competition from Alibaba Group Holding Ltd. and Baidu Inc. The Shenzhen-based company’s online gaming revenue of 8.5 billion yuan ($1.4 billion) last quarter was unchanged from the previous quarter as sales from titles including “League of Legends” and “Cross Fire” slowed.

“Tencent has invested in many Korean game developers before for their ability to create hit games,” said Ricky Lai, an analyst at Guotai Junan International Holdings Ltd. in Hong Kong. “Tencent needs more games to help boost its gaming platform.”

Tencent shares fell 4.2 percent to HK$531 as the market opened in Hong Kong. The benchmark Hang Seng Index was unchanged.

CJ Games is part of CJ E&M, which rose as much as 6.7 percent in Seoul trading.

Separately, Tencent will take about a 20 percent stake in Youku Tudou Inc. with at least $300 million of cash as well as its own video business, NetEase Inc. said on its website yesterday, citing three unidentified people familiar with the discussions.

Jerry Huang, a director of investor relations at Tencent, and Youku Tudou spokeswoman Jean Shao declined to comment on the NetEase report when contacted by Bloomberg News yesterday.

Alibaba, China’s biggest e-commerce operator, yesterday announced a platform called Yu Le Bao for individuals to invest in TV and movie projects, according to an e-mailed statement.