Tencent Will Pay $126 Million for 15 Percent Stake in Glu Mobile

Glu Mobile has struck a major deal with Tencent, selling 21 million shares, or 14.6 percent of the total, to the Chinese Internet giant for $126 million. That works out to $6 per share, higher than where Glu has traded for most of the past year.

As part of the deal, Tencent’s games division SVP Steven Ma will join Glu’s board.

“Tencent is arguably the biggest gaming company in the world,” Glu CEO Niccolo De Masi said on a call with investors. In addition to its online and mobile gaming clout in Asia, the company owns nearly half of Epic Games, which makes the Unreal game engine, and nearly all of Riot Games, the developer of the blockbuster free-to-play PC game League of Legends.

Shares of the Deer Hunter and Kim Kardashian: Hollywood game publisher shot up 21 percent in after-hours trading to $6.54, as of the time of this writing.

Currently, 71 percent of Glu’s revenue comes from North America, while only 14 percent comes from eastern Asia. Its monthly active users in the most recent quarter were 54.6 million, down 15 percent from the same quarter last year.

De Masi said the Tencent deal will likely lead to some of Glu’s games traveling east and some of Tencent’s traveling west.

“It’s a case of fewer, bigger better, and not a volumetric approach in either direction,” De Masi said. “We do believe we can grow our China business considerably given how large that market is now.”

The company also announced that it would make a Kardashian-style app based on the life of Britney Spears after signing a five- to eight-year exclusive mobile contract with the pop singer. Glu had previously signed similar five-year contracts with Kardashian as well as Katy Perry and Kendall and Kylie Jenner.

In the first quarter of 2015, Glu reported $2.1 million in profit, or two cents per share, on sales of $62.4 million. That’s ahead of Wall Street’s expectations of a one-cent loss per share on sales of $51.6 million.

The company raised its revenue outlook for the full year to between $262 million and $287 million, versus a previously forecast $245 million to $275 million.

This article originally appeared on Recode.net.

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