The shares of Zhejiang Jinke Entertainment Culture Co. dropped in the Shenzhen market after the company announced plans that it will buy Outfit7, the maker of Talking Tom, in a deal worth at least $1 billion, a Bloomberg report said.
The Chinese company's shares fell as much as 10 percent to 15.59 yuan, the first time since it resumed trade in October.
A statement released by the company on Wednesday, Jan. 25, said that it will buy Outfit7 from United Luck Group Holdings Ltd for the sum of $1 billion. The move came only days after United Luck had agreed to purchase Outfit7, the producer of Talking Tom, for the amount of $1 billion.
Earlier this month, Outfit7 said in a press release that its shareholders have sold 100 percent of the company to a consortium of investors from Asia, represented by United Luck Group Holdings Limited led by Ou Yaping.
Outfit7 earns revenue from advertising and by selling in-app games which are often free to download. The Cyprus-based company leveraged on its popularity with children by expanding to making web videos, similar to the strategy adopted by Rovio Entertainment Oy, the Angry Birds maker. It partnered with Walt Disney Co. to produce the "Talking Tom and Friends" animated series.
Jinke's acquisition of Outfit7 is the latest in the series of gaming deals made by Chinese companies, the report said. In June, Tencent Holdings Ltd acquired Clash of Clans and Hay Day maker Supercell Oy for $8.6 billion.
In July, a group of Chinese investors acquired Playtika Ltd, a casino-style online game unit owned by Caesars Entertainment Corp.
Based on information from its website, Outfit7 was established in 2007 and it specializes in free mobile apps and games, animated videos and merchandise licensing. It has more than 9 million YouTube subscribers and its videos have received more than 9.4 million views.
Outfit7 is based in Cyprus and operates in Slovenia, the United Kingdom, and China. The company's Talking Tom and Friends franchise has more than 5.6 billion app downloads worldwide, reports said.