China’s Jinke Slumps on Plan to Buy Talking Tom Maker Outfit7

Zhejiang Jinke Entertainment Culture Co. slumped by its daily limit in Shenzhen after announcing plans to buy the London-based maker of Talking Tom games for at least $1 billion.

Shares of Jinke dropped as much as 10 percent to 15.59 yuan after resuming trade for the first time since October. The company plans to buy gamemaker Outfit7 from United Luck Group Holdings Ltd. for at least $1 billion, according to a statement Wednesday. That came just days after United Luck agreed to buy the producer of Talking Tom titles for $1 billion.

Outfit7 makes money through advertising and in-app purchases of games that are typically free to download. To take advantage of its popularity with children, Outfit7 has also been expanding with web videos, a tactic also being taken by Angry Birds maker Rovio Entertainment Oy. A “Talking Tom and Friends” animated series was made with Walt Disney Co.

The acquisition of Outfit7 is the latest in a raft of gaming deals by Chinese companies. In June, Tencent Holdings Ltd. led an $8.6 billion acquisition of Clash of Clans and Hay Day maker Supercell Oy. Caesars Entertainment Corp. agreed to sell its casino-style online game unit, Playtika Ltd., for $4.4 billion to a group of Chinese investors in July.

Founded in 2009, Outfit7’s portfolio includes free mobile apps and games, animated videos and merchandise licensing, according to its website. The company’s also has about 9 million YouTube subscribers and its video content has received more than 9.4 billion views.

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