By Sophie Knight, Ritsuko Ando and Malathi Nayak
TOKYO/HELSINKI/SAN FRANCISCO (Reuters) - Japanese tech and telecoms group SoftBank Corp is tobuy into Finnish mobile game maker Supercell in a deal that values the three-year-old maker of hit game "Clash of Clans" at $3 billion, in the hopes of building a gaming company with a significant global footprint.
SoftBank said it would pay 150 billion yen ($1.53 billion) for a 51 percent stake in Supercell, with 20 percent of that investment coming from its own mobile games maker subsidiary GungHo Online Entertainment Inc.
Market researcher Newzoo estimates global game revenues across all platforms will reach $86.1 billion by 2016 as the number of gamers reaches 1.55 billion. It expects the fastest growth to come from mobile gaming, which will make up almost 30 percent of the total, up from about 17 percent this year.
The deal shows SoftBank Chief Executive Masayoshi Son's appetite for foreign M&A has not dimmed since his $21.6 billion acquisition of U.S. mobile carrier Sprint Corp this year.
He was quoted on Supercell's blog as saying the acquisition was part of its "quest to become the #1 mobile Internet company," showing his ambition to expand further beyond its main wireless and Internet services business.
The stake acquisition also underscores the spectacular rise of Supercell, a small gaming company with around 100 employees and two hit games: "Clash of Clans" and "Hay Day." The games reached No. 1 in Apple's App Store in 137 and 96 countries respectively, SoftBank said, citing app analytics firm AppAnnie.
Supercell and GungHo developed a relationship after they struck a partnership to launch strategy game "Clash of Clans" in Japan this July, Supercell CEO Ilkka Paananen said in a telephone interview with Reuters.
"How this came about is we've been very excited about the Asian market, and Japan especially, for the last 6 to 9 months... since we launched Clash in Japan and it obviously started to do very well," Paananen said.
"Clash of Clans" ranks among the top three iOS games in Japan and China, he added.
Supercell, which was founded in 2010, is now more valuable than Zynga, the company behind once-popular games such as "FarmVille" which is struggling with a fall in users and is worth $2.8 billion.
Last year sales at Supercell rose by more than 500 times to 78.4 million euros compared with 2011, according to a filing by SoftBank, while operating income turned to a profit of 39.2 million euros compared to a loss of 1.8 million in 2011.
"Now that we have Softbank backing us we can take (our)existing games to new markets and strengthen our position in the big three Asian markets - Japan, Korea and China," Paananen said.
Supercell also plans to release new games at some point, Paananen said without providing a timeline.
SoftBank now has the third largest market capitalisation in Japan and is set for a major windfall as Alibaba, China's top online retailer in which it owns a 36.7 percent stake, is preparing for a stock market listing.
Globally, mobile game revenues generated through Apple iOS and Google Playstore are expected to exceed $10 billion this year, according to Adam Krejcik at technology and gaming research firm Eilers Research in California.
Led by "Angry Birds" maker Rovio, Finland's gaming industry has been a rare bright spot in a small Nordic economy which has struggled with a decline in traditional industries such as paper and machinery as well as the decline of Nokia, once the world's biggest handset maker.
Nokia announced in September that it was selling its handsets unit, not including patent licensing fees, to Microsoft for $5 billion. The handset business was the biggest part of Nokia's operations. After the deal 90 percent of the company's sales will come from its telecom equipment business, Nokia Solutions and Networks.
Paananen, who will remain in his position as CEO of Supercell, said that the company will work autonomously.
"The most important point in the deal for us is that it guarantees our independence," Paananen said.
In a company blog post, he also reassured Finns that the company's operations would remain in Finland and that it would continue to pay taxes in the country.
"I think more and more people in this country are realising that there is life after Nokia!" he wrote.
(Additional reporting by Nobuhiro Kubo; Editing by Christopher Cushing, Pravin Char and Carol Bishopric)
Source: http://news.yahoo.com/softbank-buys-1-5-billion-stake-finnish-mobile-142458866--sector.html
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