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HUYA to take minority stake, form joint venture with MTG's esports unit ESL

Chinese livestreaming platform HUYA Inc. has struck a binding term sheet with Modern Times Group AB to acquire a minority stake in the latter's esports business Turtle Entertainment GmbH, or ESL, for $30 million.

The transaction values ESL at an enterprise value of $425 million, according to a Sept. 2 statement.

HUYA and ESL will also form a strategic joint venture to enable the expansion of ESL's offering into China. ESL will issue new shares worth $22 million to partially fund the joint venture, as well as to facilitate further expansion.

The deal is subject to customary due diligence, as well as the negotiation of definitive transaction documents. The finalized agreement is expected to be signed during the fourth quarter of 2019, with MTG to remain ESL's majority owner post completion.

The transaction came amid a booming esports industry in the Asia-Pacific region, especially mobile games, due to a relatively young population and mobile-first culture.

HUYA primarily competes with DouYu International Holdings Ltd.